J.C. Penney Same-Store Sales Since 2006

If you were a J.C. Penney (JCPN.Q) shareholder, which would you rather live through: another financial crisis akin to the downturn of 2008-09, or five more quarters with former CEO Ron Johnson at the helm? The answer, at least from the perspective of J.C. Penney's same-store sales, is clearly the former.

When it comes to retail stocks, arguably no single financial metric is more instructive than same-store sales, which measure how much sales change on a year-over-year basis at retail stores that have been open at least 12 months. This metric allows investors to gauge what percentage of new sales comes from actual sales growth in contrast to the portion that comes from new store openings. Yet, this is also one of the few critical financial metrics investors can't readily get from online data aggregators such as Yahoo! Finance and Finviz.com, among others.

With this in mind, investors might appreciate a one-stop shop, if you will, of J.C. Penney's quarterly same-store sales from the past decade. The full table is located at the end of the article and is followed by a link to a free report that offers invaluable investing advice. Not only does this metric help investors appreciate the depth of damage suffered by J.C. Penney over the past decade, but it should also give you a better grasp of strategies the department store chain should avoid in the future.

Take Ron Johnson's fateful five-month tenure as CEO as an example. After leading Apple's retail operations for 11 years, Johnson was hired by J.C. Penney in 2011 to breathe new life into the 113-year-old company. At the time, the Dallas, Texas-based retailer had survived the financial crisis and had even seen its same-store sales begin to grow once again from the first quarter of 2010 through the second quarter of 2011.

All of this changed, however, in the third quarter of 2011, when comparable sales reverted to their downward trend, causing then-CEO Mike Ullman to lament its customers' "limited discretionary spending capability." Whether this downturn was the reason Johnson was brought on board is certainly possible, but, either way, hindsight makes it clear the move was a mistake.

After taking the helm, Johnson radically altered J.C. Penney's business. He did away with its coupon-centered strategy of attracting customers, replacing it with one based on "everyday value." He reorganized the company's operations. And he initiated a full-blown redesign of its stores, envisioning a collection of higher-end boutiques as opposed to a traditional department store layout.

Suffice it to say, the plan failed. Within a year of his ascent, same-store sales at the retailer were falling by double digits on a quarterly basis; in the fourth quarter of 2012, they dropped a staggering 31.7% -- undoubtedly one of the worst quarterly performances at a major U.S. retailer in history. The magnitude of the decline was so steep that Johnson was fired soon thereafter, replaced by his predecessor (and, subsequently, his successor) Mike Ullman.

Since then, Ullman has sought to right the ship. Although it's still too early to claim any semblance of victory, the last six quarters of increasing same-store sales seem to suggest the tide has turned. The one exception to this trend was the third quarter of last year, when year-over-year comps were flat.

Whether this is all too little, too late remains to be seen. But either way, the one metric that will help you determine if J.C. Penney can successfully emerge from the Ron Johnson era is same-store sales. What follows, in turn, is an accounting of this critical metric going back to the beginning of 2006.

Source: J.C. Penney's earnings releases and quarterly financial filings.