JCPenney discusses price hike formula

Retail Editor 3, February 25, 2011

Plano, Texas - After several months of experimentation, JCPenney feels it has a handle on the impact of higher prices, executives said during today's quarterly call with analysts.
When retail prices go up on opening price point items, units fall. But when prices go up on better and best goods, the higher tickets make up for it, according to Kristen Hayes, vp of investor relations.
She did not address how unit volume was affected by higher prices on better and best merchandise.
"It's important to test because you learn not only the pricing issues but also the customer behavior around that," she said.
JCPenney's strategy for special promotional events such as Mother's Day and Back-to-School will be to stick with normal discount pricing on key seasonal items, then return to higher pricing once the event ends, she said.
Chairman and ceo Mike Ullman told analysts the pricing issue won't be as sensitive during the first half of the year "because we got out ahead of it."
The retailer is looking to offset higher prices by squeezing more cost out of the back end, "taking even greater control of the supply chain," said Hayes.

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