Home & Chinni emerge as stars of the third qtr. show

Carole Sloan, November 17, 2003

Home was one of the four stars in the third quarter performance of JCPenney's department store segment.

Within home, furniture led the division with high teen comps, according to Charlie Chinni, executive vp, home, fine jewelry and family shoes. All three of Chinni's areas were among the top four performers, which also included back-to-school apparel.

Overall, Chinni added, "Home is doing terrific with overall double-digit increases for the quarter. We got real aggressive."

During a conference call with analysts discussing the third quarter, Vanessa Castagna, ceo of department stores, catalog and Internet pointed to the improved performance of the catalog/Internet business as well as "a 190-basis point improvement in gross margin, better execution and more experience in centralized operations" as other contributing factors to the department stores' increased business.

For the fourth quarter for the department stores/catalog and Internet Castagna forecast "a low single digit increase both in sales and profit."

Separately, Chinni said, "We're writing Christmas level of business now. Home is way ahead of plan. We're doing great window business, but we need some work in the lamps, frames, crystal and ,seasonal areas even though we're doing business there."

In addition, Castagna related, "We will continue to emphasize our dominance in basics including towels."

But she explained "we're packing more value into the product, it's not always a matter of low price."

Basics, she added, represent over one-half the company's sales and profits "and include fashion basics."

One of the key elements across the department store segment is the improvement in consistency, execution and the central checkouts in the stores, Castagna said. There also has been significant improvement in replenishment and markdowns.

The company will continue to emphasize its three-channel ability with home as a major opportunity.

Within its merchandise mix, "basics, including fashion basics represent more than half of our sales and profit," she noted. "We're packing more value into the products. It's not always a matter of the lowest price."

Castagna also cited home as one of the key strengths of the company noting that the new Chris Madden home programs as well as its new emphasis on the bridal market with Colin Cowie, a celebrity wedding expert, who was recently named a consultant "as enhancing the home brand image."

Responding to a comment by an analyst who praised Chinni, Castagna added "he is an outstanding performer, a great merchant and a great leader."

Looking ahead, Castagna said "holiday business is encouraging, and we see positive fourth quarter results."

Since the beginning of the company's turnaround efforts three years ago, there has been a 10 percent reduction in store numbers, a 10 million square foot reduction.

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