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JCPenney ‘Optimistic' on Home Business

NEW YORK - "It's a journey, not a project," said Myron (Mike) Ullman III, chairman and ceo of JCPenney, addressing financial analysts at the Goldman Sachs 2010 Global Retailing Conference earlier this month.
     "A 108-year-old company is not going to take 108 years to get there," he quipped, adding that JCP has a five-year plan to achieve a 10% operating profit level.
     A large part of that plan is merchandising-based, and perhaps the single most vital part is the Liz Claiborne launch, now underway in core apparel and fashion accessory categories. Ullman said the early consumer response to the launch has been "well ahead of our projections," encouraging for a company that sees national brands as a way to recapture margin dollars.
     Using the $9.99 private label polo shirt as an example of the type of bread-and-butter "good" product that JCP does in great volume - the average retail unit price is about $15 at JCP - Ullman said the current major infl ow of Liz Claiborne and MNG by Mango products are targeting the "better" and "best" end of JCP's price-value offering to consumers.
     The home division, too, will ultimately benefit from the Liz Claiborne rollout. "We actually are quite optimistic about the home business in 2011," Ullman said. The housewares department has been trending at double-digit increases of late, he noted, and JCP is "starting to see traction in soft home - in luggage, bedding, and bath."
     Ullman was less sanguine about the window coverings and furniture categories, commenting that it will "take longer getting those two businesses on track." Furniture is in only 150 of the company's 1,110 stores, he observed -- and sales volume in window treatments, he believes, is suffering because "people are not investing" in home redecorating or new homes at robust rates of spending.
     JCPenney will "be a little louder" in advertising and digital media in 2011, he said. The retailer keyed up its fall Liz Claiborne offering just this past Sunday with a "Little Red Book" print-and-internet campaign that encourages shoppers to "see it on the runway" and "buy this look." JCP debuted its Little Red Book in a September 2009 mailing as it initiated its transition from "big book" catalog mailings to more specialized, targeted media. Ullman said print mailings remain vital to pumping up online and in-store sales volume, validating the company's decision to "transition" rather than simply walk away from its "static" catalog segment.
     Noting that JCPenney recently notched a 108-year-high in gross profit, Ullman said he thinks the company, coming out of its two-year "bridge" strategy in a cash-strong position -- and with updated technology, award-winning customer service, and broad new assortments of fresh merchandise -- is in a sound condition to take advantage of any signs of renewed consumer discretionary spending now and in the year to come.

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