UPDATE: June 5, 2019: J.C. Penney has hired a new general merchandise manager to head its women’s apparel category, a troubled spot for the retailer for the past several years. Joining June 10 as a senior vice president is Victor Ejarque Lopez, who will report to chief merchandising officer Michelle Wlazlo, according to a company press release. Lopez previously served as vice president and general merchandise manager of global operations at Guess, where he oversaw merchandising, buying, planning, allocation, supply chain and logistics. He has also worked for Kmart, the Spanish fashion brand Stradivarius and Polo.

Dive Brief:

• J.C. Penney's first-quarter sales fell 5.6% year over year to $2.44 billion, while its comparable-store sales fell 5.5%, according to a company release. At $154 million, the department store retailer's loss almost doubled that of the year-ago period and was significantly larger than analyst predictions.
• Penney CEO Jill Soltau said in a statement that the retailer has been working to build out its senior management team while also working to rightsize its inventory, reducing it by 16% in Q1. The retailer has also been shaking up its assortment, which includes an exit from appliances that dragged down Penney's sales, Soltau said.
• Joining the retailer as chief customer officer is Shawn Gensch, who was previously chief customer officer for Sprouts Farmers Market. Gensch will oversee J.C. Penney's marketing strategy, including digital, advertising, creative design, customer research, loyalty, analytics, social media, sales promotions and events marketing, according to a Tuesday release. Gensch has also co-founded a loyalty platform and worked for 10 years at Target in marketing roles.

Dive Insight:

Soltau emphasized the work to revamp J.C. Penney. She also plans to release a long-term strategy map in the coming months. "We are working to reestablish the fundamentals of retail at JCPenney, and at the same time, we are building capabilities to satisfy the wants and expectations of our customers," she said.

But the latest efforts come after years of slow-burning turnaround efforts that failed to change the retailer's sales trajectory. The retailer's latest results gave investors jitters after earnings fell short of analyst estimates, sending shares down 8.7% in premarket trading, according to MarketWatch. 

As Neal Saunders, managing director of GlobalData Retail, noted in emailed comments, the quarterly performance was especially poor given low expectations and a favorable comp against last year. "Despite the actions of leadership, the experience on the shop floor remains virtually unchanged," he said. "The majority of stores still have a dispiriting feel and are hard to shop with no coherence to ranges. Inspiration is severely lacking."

In recent months, Soltau has been building out her team, including a new chief merchant in Michelle Wlazlo, who has been a senior vice president of apparel and accessories merchandising at Target. During the first quarter, Penney also launched a new checkout process meant to shorten lines and tested a centralized pick-up and returns area, according to a company presentation.

After years of struggles with overabundant inventory and assortment flubs, Penney is also meeting with merchandise partners to talk about new ideas, trying to match its apparel to customer trends and refocusing its home goods offering. It's also made painful tweaks, including closing stores and exiting the appliance category. (Entering the category was an attempt to profit off of Sears' decline.)

All of these changes are being done while the retailer is constrained by a long-term debt load of $3.8 billion and quarterly interest expenses of $73 million.

As Saunders noted, these sorts of efforts are necessary and won't produce results overnight. "Looking ahead, our main concern is not that CEO Jill Soltau will fail to take action nor that she will make the right decisions, but that the company will run out of time and capital to make the necessary changes," he said. "JC Penney is a very weak operator in one of the toughest sectors of a highly competitive retail market in an era of more subdued demand from highly fickle consumers. Put bluntly, the odds are firmly stacked in favor of failure."

To turn things around, Penney will need to think out its apparel, focus on its own brands, better understand its customers and potentially bring in more concessions like Sephora, Saunders added.