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JCPenney: Home still having a tough time

Plano, Texas - JCPenney said it is grappling with home issues following the department makeover in June, but reported improvements elsewhere in its business in a financial update released this morning.

"Getting the new home strategy up and running has been more challenging than originally planned," the company announced. A "handful" of the 505 stores selected for dramatic transformation under previous ceo Ron Johnson still have yet to reopen. But where the new format is up and running, "[t]he merchandise assortment, shopping environment and price points have not resonated with customers, and sales trends remain weaker in stores," according to the company.

The retailer - which will have a new home chief when Jan Hodges becomes senior vp/gmm for home goods Nov . 1 - is working to restore more traditional designs in a reset that had swung toward contemporary. Penney is also bringing in more opening price points and remerchandising key classification areas.

What's working? Penney said women`s and men`s apparel, fine jewelry and women`s accessories are performing better than the company average - which for the month of September consisted of a 4.0% sales decline. Women`s apparel, the company`s largest business, reported positive sales for the month, the company said.

Online sales appear to be recovering faster than bricks-and-mortar and were up 18.6% to-date in the third quarter. During September, jcp.com sales grew 25.3% year-over-year.

Heavy clearance is chewing into margins and dinking average unit retail. However, units per transaction and average transaction value were up in September compared to the same period a year ago, the company said.

Seeking to quell markets, Penney reported the public stock offering it closed last week generated roughly in $785 million in cash, giving the company year-end liquidity expected to exceed $2 billion.
"JCPenney remains current in its payments to vendors and we are grateful for the strong support and confidence they have shown as we continue to make progress in our turnaround," said ceo Mike Ullman.
He re-iterated that the turnaround is still in its early stage.

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