J.C. Penney CEO who swore off coupons offers a coupon


By Phil Wahba

Oct 11 (Reuters) - The J.C. Penney Co Inc CEO whotried to wean the retailer from a heavy dependence on pricediscounts and coupons has a somewhat surprising offer forcustomers: a coupon.

In February, J.C. Penney stopped offering coupons and mostof the hundreds of sales events it used to hold each year infavor of an approach that emphasized everyday low prices. It wasthe first step in a planned multi-year transformation thatincludes opening 100 specialized boutiques in its stores forbrands such as Levi's, Jonathan Adler and Izod.

"With all the changes taking place in our stores, thequestion I hear most often is: 'What's your vision forjcpenney?'" Chief Executive Ron Johnson wrote in the e-mail sentto customers early on Thursday.

Sales slid disastrously in the months after the changesbegan and the company already warned investors it will be atough holiday season. Penney has since made some tweaks such asrearranging its displays of merchandise to make clear exactlywhich items are on clearance.

The problem, according to analysts, is that customer traffichas fallen as shoppers seem to lack a clear reason to come intoPenney's stores in the absence of discounts and coupons.

Johnson's email, which says one of Penney's core values isthat a shopper should not have to wait for a sale or coupon toget a great value, includes a $10 "gift" to thank patrons fortheir loyalty. It can be used for an in-store purchase untilNov. 4.

"Why do that unless you want to drive traffic?" Morningstaranalyst Paul Swinand told Reuters. "It's another sign they'rehaving trouble weaning customers off of the old ways ofshopping."

Despite early signs of success and some positive signsduring the back-to-school shopping period, early September was"much tougher" than expected, Johnson told Wall Street analystsin September.

Penney shares were up 7.7 percent at $26.02 on Thursdayafternoon on the New York Stock Exchange.

(Reporting by Phil Wahba in New York; editing by Matthew Lewis)