JCPenney: We are entering the final phase of the turnaround

Retail Editor 3, February 26, 2014

Plano, Texas - JCPenney's home store reset will be ready in early March with some new brands and a new marketing handle: "The Home Collections at JCPenney."

During this afternoon's conference call to review fourth quarter and fiscal year results, ceo Mike Ullman did not identify the new brands coming to the floor. Most likely, they will include Liz Claiborne - which had been slated for expansion into home until Ron Johnson took the reins in 2012.

Across the store, assortments must be more narrow and deep, said Ullman, who rejoined the retailer last April after Johnson's outser. In the home department, the Johnson-created JCP Everyday label has been eliminated. The Conran and Michael Graves areas have been resized. The Royal Velvet assortment is being expanded.

The new home floor will emphasize bedding, bath, small electrics and decorative merchandise, Ullman said.

"The soft [home assortment] will be larger than the hard, the traditional [designs] will be larger than the modern. The opening price points are there," he said. "We are planning to be promotionally very clear about the strengths of our home store."

JCPenney this year will also open a location in Brooklyn that Ullman described as "the store of the future."

The most challenging and expensive portions of JCPenney's turnaround "are behind us," said Ullman. "We're heading into the final phase."

This year, the company plans to return to its normal cadence of inventory flows, promotions and clearance events, he added.

For the quarter ended Feb. 1, JCPenney swung to a profit with $35 million in net income compared to a net loss of $552 million in last year's fourth quarter. Gross margin rate jumped 460 basis points year-over-year despite markdowns in the quarter's final weeks.

Sales dipped 2.6% to $3.78 billion during the period, which had one fewer week than in 2013, with comps up 2.0%. Holiday sales (November/December) rose 2.0% year-over-year. Home was identified as one of the top performing categories during the quarter.

The retailer's overall ecommerce business increased sequentially as the quarter proceeded, with revenue soaring 45% in January alone. For the full quarter, online sales climbed 26.3% to $381 million. " for home has been good for some time," Ullman noted.

For the full fiscal year, net loss widened to $1.39 billion from a net loss of $985 million last year as JCPenney worked to rid itself of poorly performing merchandise. Sales fell 9.7% to $11.86 billion, with same-store sales down 7.4% on top of a 25.2% comp decline in the year-ago quarter.



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