J. C. Penney Company, Inc. JCP
(the "Company") today reported that it is making solid progress in its
turnaround and provided an update on the Company's operating performance
and key initiatives underway to return to profitable growth.
Myron E. (Mike) Ullman, III, Chief Executive Officer of JCPenney, said,
"Reconnecting with our customers and getting them into our stores is a
top priority. Our enhanced messaging is reminding shoppers that
JCPenney's offering of trusted private brands, key national brands and
unique attractions sets us apart from the competition. Over the last
six months, we have made significant strides and are now seeing positive
signs in many important areas of the business, in spite of what
continues to be a difficult environment for consumers and retailers in
general. While pleased with the improving trends and more predictable
performance, we are still in the early stages of the turnaround and will
maintain a relentless focus on achieving our long-term goals for the
benefit of our customers, associates and shareholders."
The Company is pursuing a number of strategic initiatives in order to
continue driving improved performance. It provides an update in key
areas of strategic focus below.
Improving Sales Trends
The Company saw improved sales trends in fiscal September, and expects
this to continue throughout the remainder of the year.
-- Sales for the fiscal month of September, ended October 5, were down 4.0%
when compared to September 2012. This constitutes a 580 basis point
improvement over August 2013.
-- Sales on jcp.com http://jcp.com/ continue to trend double digits ahead
of
last year, and are up 18.6% in the third quarter to date. September
sales
on jcp.com experienced 25.3% sales growth over the same period last
year.
-- Women's and Men's apparel, fine jewelry and Women's accessories are
performing better than the Company average. Women's apparel, the
Company's largest business, reported positive sales for the month of
September.
-- Gross margins continue to be impacted by lower clearance margins due to
the overhang of inventory from the first two quarters of the year,
higher
levels of clearance units sold during the period, as well as the
Company's transition back to a promotional pricing strategy during the
second quarter of 2013.
-- For the month of September, units per transaction and average
transaction
value are above last year, while average unit retail was below last
year.
Financial Condition
Last week, JCPenney closed a public offering of 84 million shares of
common stock that generated approximately $785 million in net cash
proceeds. The Company's year-end liquidity is now expected to be in
excess of $2 billion, taking into account the net proceeds of
approximately $785 million from the offering, as well as the previously
disclosed expectation of $1.3 billion of year-end liquidity including
the undrawn portion of the Company's credit facility.
Reconnecting with the Customer to Drive Traffic and Purchase Conversion
With its renewed focus on putting the customer first, JCPenney is
rebuilding its base of highly satisfied and loyal customers. Customer
service scores are at all-time highs for the Company.
During September, purchase conversion increased when compared to the
same period last year for both stores and jcp.com, primarily due to
improved inventory levels in key items and sizes that the customer
expects to find at JCPenney. Traffic trends have improved during the
quarter, including positive off-mall traffic for the last two weeks of
September, though traffic in the Company's mall-based stores continues
to be difficult.
Mr. Ullman continued, "Reconnecting with our customers starts by having
the merchandise they want and expect from JCPenney and finishes with an
exceptional experience when they shop with us. With inventory restored
to the appropriate levels, we are in stock in the key items and brands
she expects to find during every visit. At the same time, our marketing
will continue to capitalize on the compelling value we offer, including
the sales and promotions our customers love."
Restoring the Right Merchandise Assortment and Appropriate Inventory
Levels
Private brands and basics are an integral - and profitable - part of the
Company's strategy. Private brands, such as St. John's Bay, Arizona and
Stafford, and key item basics have been restored to inventory levels
sufficient to meet customer demand heading into the critical Holiday
season.
Mr. Ullman added, "In addition to our private brands, our assortment of
trusted national brands such as Levi's, Carters, Nike and others has
made JCPenney a leading destination for families. I am pleased that
JCPenney's performance in many key national brands is significantly
ahead of last year. 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."
Fixing the Home Store
Getting the new Home strategy up and running has been more challenging
than originally planned. To date, the Company has re-opened all but a
handful of its 505 new Home departments. The merchandise assortment,
shopping environment and price points have not resonated with customers,
and sales trends remain weaker in stores. In-line with customer
preferences, the Company is working aggressively to create a more
balanced assortment between modern and traditional home furnishings,
with opening price points and an easy shopping environment, which
includes remerchandising the home store by classification in key areas.
Leadership
The Company has a highly experienced and focused leadership team. Over
the last few weeks, it has filled several key positions with highly
qualified executives from inside the Company. This includes the
appointments of Scott Laverty to EVP, Chief Information Officer, Jan
Hodges to SVP, GMM of Home and Katheryn Burchett to SVP of Property
Development.
Mr. Ullman concluded, "Although there remains significant work to be
done, the experience, talent and drive of our team is allowing us to
confront our challenges head on and take swift and effective actions to
address them. We are all dedicated to continuing the momentum underway
and restoring JCPenney to a leadership position in American retail. It
will take time, but we are on the right path with a sound strategy and
achievable goals."
Media Relations:
(972) 431-3400 or jcpnews@jcp.com
Investor Relations:
(972) 431-5500 or jcpinvestorrelations@jcpenney.com
About JCPenney:
J. C. Penney Company, Inc. JCP, one of the nation's largest
apparel and home furnishing retailers, is dedicated to becoming
America's preferred retail destination for unmatched style, quality and
value. Across 1,100 stores and at jcp.com, customers will discover an
inspiring shopping environment that features the most sought after
collection of private, national and exclusive brands and attractions.
For more information, please visit jcp.com.
Forward-Looking Statements
This release may contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Words such as
"expect" and similar expressions identify forward-looking statements,
which include, but are not limited to, statements regarding sales trends,
year-end liquidity and the Company's outlook for the holiday season.
Forward-looking statements are based only on the Company's current
assumptions and views of future events and financial performance. They
are subject to known and unknown risks and uncertainties, many of which
are outside of the Company's control, that may cause the Company's
actual results to be materially different from planned or expected
results. Those risks and uncertainties include, but are not limited to,
general economic conditions, including inflation, recession,
unemployment levels, consumer confidence and spending patterns, credit
availability and debt levels, changes in store traffic trends, the cost
of goods, more stringent or costly payment terms and/or the decision by
a significant number of vendors not to sell us merchandise on a timely
basis or at all, trade restrictions, the ability to monetize non-core
assets on acceptable terms, the ability to implement our turnaround
strategy, customer acceptance of our new strategies, our ability to
attract, motivate and retain key executives and other associates, the
impact of cost reduction initiatives, our ability to generate or
maintain liquidity, implementation of new systems and platforms, changes
in tariff, freight and shipping rates, changes in the cost of fuel and
other energy and transportation costs, increases in wage and benefit
costs, competition and retail industry consolidations, interest rate
fluctuations, dollar and other currency valuations, the impact of
weather conditions, risks associated with war, an act of terrorism or
pandemic, the ability of the federal government to fund and conduct its
operations, a systems failure and/or security breach that results in the
theft, transfer or unauthorized disclosure of customer, employee or
Company information and legal and regulatory proceedings. There can be
no assurances that the Company will achieve expected results, and actual
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