J.C. Penney Co. Inc.’s $163 million first-quarter loss might have signaled a rockier path forward for the chain than some anticipated, but chief executive officer Ron Johnson’s turnaround plan continues to drive the retail conversation.
“People say that J.C. Penney has stolen our mojo because their ads look like ours,” said John Mulligan, executive vice president and chief financial officer of Target Corp., at the Citi 2012 Global Consumer Conference. “I think there are a couple of commercials and circulars that look like our brand, [but] that’s not stealing our brand.…There’s the misperception that it’s getting away from us and that’s not true at all.”
Johnson has upped Penney’s marketing profile, simplified its pricing structure by eliminating coupons and is redesigning the store around shops-in-shop.
Karen Hoguet, chief financial officer, Macy’s Inc., restrained herself on the topic of Penney’s at the conference.
“Every year somebody has a new strategy,” she said. “The good news is that we’re winning. Also, we’re trying hard not to get distracted by what others are doing around us.”
Hoguet did note how difficult it is to move away from coupons and cited the company’s experience after its May Department Stores Co. acquisition. “When we tried it, we weren’t so sure the patient would survive,” she said.
Barclays analyst Robert Drbul cut his target price on Penney’s to $30 from $45 Tuesday, noting the company would remain challenged as it works to “reeducate the consumer about its new pricing.”
Here’s a look at what else was said at the Citi conference.
John Mulligan, executive vice president and cfo, Target • “Food has brought something to the rest of Target. More localized product is critical in food. A customer from Minneapolis wants that pickle from Minneapolis.…We’ve begun to bring that segmentation to the rest of our chain.”
• “Food drives people into the store. If we aren’t selling those other discretionary items, we’re just a grocery store.” Karen Hoguet, cfo, Macy’s • “The regular price [women’s apparel] goods are selling well. It’s a little harder to get rid of the clearance goods, but regular price gives us some hope that it’s getting better.”
• [Millennials] do roughly $65 billion in sales in the categories in which we compete, pretty big opportunity…there’s just a lot more to come.”
Pamela Knous, executive vice president, cfo, Chico’s FAS Inc. • “About the only new development that’s going on the United States right now is in the outlet arena…we are being sought out by the developers of these locations. There are A, B and C sites for these outlet malls, very much not a clearance [venue] anymore.”
• “[The Chico’s brand] serves a somewhat older demographic, 50-plus, but we’re very pleased to say that it’s the only aged demographic that’s growing. We continue to have very strong comps, we continue to gain share in that space. [The Chico’s brand] throws off huge, consistent cash flow that we continue to invest in our other brands.”
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