Market Overview

J.C. Penney To Make Private-Label Brands a Priority

J.C. Penney To Make Private-Label Brands a Priority

After two years of declining sales, shifts in top management and very public battles with activist investors, J.C. Penney (NYSE: JCP) finally showed some signs of life during Black Friday.

The company hopes to continue its momentum by eliminating or drastically reducing some of the high-profile brands that it sells. These brands and lines include JCP Menswear, Joe Fresh and some Martha Stewart home furnishing.

The retailer will begin to eliminate the brands as early as January 2014. “We don't have six or seven years to get our business back,” CEO Mike Ullman told Reuters on Friday.

The freed up floor space will make room to sell the company's more profitable, exclusive private-label brands such as JCP Home and Cooks. The company will also introduce its Ambrielle lingerie line in February, as well as adding sportswear to its J. Ferrar line of men's suits.

“What we now need is to edit things out that didn't resonate sufficiently,” Ullman said.

Related: Amazon To Take On Wholesale Retailers With New Pantry Business

Ullman ran J.C. Penney from 2004 until his retirement in November 2011. Ullman was replaced with former Apple (NASDAQ: AAPL) executive Ron Johnson. Johnson's tenure lasted less than two years as he was fired in April 2013.

Johnson promised to turn the aging retailer into a company that is young, hip and attractive to consumers. Needless to say, he failed publicly. The board reached out to Ullman to come back from retirement to clean up what Businessweek described as a “mess” that Johnson created.

“He's trying to somehow rebuild a store that has an appeal to the core J.C. Penney customer,” said retail analyst Walter Loeb of Loeb Associates.

The renewed focus on private-label merchandise is being seen as a necessary and crucial step to firstly win back lost customers and then gain new ones.

“A retailer in need depends on shoppers who know it well to begin a recovery,” said Gilford Securities analyst Bernard Sosnick. “Other shoppers won't come for quite a while."


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