J.C. Penney has a new pricing model to complement a new strategy to reconnect the retail giant with its customers, Chief Executive Officer Ron Johnson told CNBC on Tuesday, as he insisted the company's balance sheet was not a concern.
“It’s been tougher than we anticipated,” Johnson said on “Squawk on the Street.” Hinting that his new strategy might take longer than expected, he added that “it is a one-year transition that's part of a multiyear transformation.”
The retailer has also been dogged by concerns about the health of its balance sheet. Johnson dismissed that speculation, saying its financial position is "rock solid." He added that Penney could fund the transformation with its current cash flow. "The least fear I have is liquidity."
Acknowledging that Penney's previous pricing strategy had confused and alienated customers, Johnson has vowed to reinvent the model. “We’re treating this company as a startup,” he said. “We’re inventing a whole new model to do business.”
Penney’s CEO made his comments just days after the store pulled back the curtains on three new denim shops that eventually will be rolled out to 700 stores. The effort is part of an overall strategy to transform the retailer, and shore up a stock price that has spiraled lower by nearly 40 percent since the beginning of the year.
In January, Penney scrapped the hundreds of sales it offered yearly in a bid to simplify pricing. Yet last week, the department store announced that beginning Aug. 1, it would again change its pricing in favor of “clearance” bargains that it hopes will be simpler for consumers.
Johnson, who took the helm of the struggling retail giant in November, told CNBC that he would give himself a “B+” grade in the long-term.