WWD.com/business-news/government-trade/jc-penneys-sourcing-looks-to-the-west-7642388/
government-trade
government-trade

J.C. Penney’s Sourcing Looks to the West

The retailer's sourcing has taken on an increasingly American flavor in recent seasons.

NEW YORK — J.C. Penney Co. Inc.’s sourcing has taken on an increasingly American flavor in recent seasons.

Luis Capuano, Penney’s country manager for the Western Hemisphere, said the Plano, Tex.-based midtier department store chain last year registered a 30 percent increase in imports from Mexico, Central America and South America. Production is about evenly split between wovens, including shirts and denim and twill bottoms, and a variety of knits.

“We do have some other categories, such as shoes and some home goods, but the biggest part of our business in the region is in apparel,” he said. “Our presence in the Western Hemisphere has become much more important as prices and the cost of goods in Asia have been going up.”

Capuano, a Guatemalan native who works from Penney’s office in Guatemala City, noted that the store first established a sourcing office for the Americas 20 years ago, but had shut it down as import focus had shifted to Asia. That facility reopened four years ago, during Ron Johnson’s tenure as chief executive officer, and has been growing since Myron “Mike” Ullman 3rd began his second stint as ceo in April 2013.

He noted that Guatemala, in addition to serving as a hub for Penney’s activities in the region, has filled a particular niche in the retailer’s assortment.

“I’d say Guatemala is geared to what you might call ‘middle fashion,’” he told WWD. “A lot of the more basic things are done in places like Honduras, but Guatemala is good for things that have a little bit, but not too much, embellishment.”

Capuano spoke last month at a presentation titled “Sourcing Closer to Home” sponsored by the Apparel & Textile Association of Guatemala and held in part to promote the Apparel Sourcing Show to be held May 20 to 22 at the Grand Tikal Futura Hotel in Guatemala City.

At the session, officials including Sergio De La Torre, minister of the economy for Guatemala, touted the country’s advantages, among them its proximity to the U.S. and span from the Atlantic Ocean to the Pacific. De La Torre noted that the nation is home to 152 apparel manufacturers, 42 textile mills, 260 service and trimming companies and 18 agencies dedicated to apparel and textiles.

Apparel and textiles account for 4 percent of the country’s gross domestic product and 19 percent of its industrial output, and the products have risen to become its top exports. Guatemala shipped $1.51 billion of apparel and textiles outside its borders last year, up 6.9 percent from the $1.41 billion shipped in 2012 and 60.5 percent above the U.S. dollar value of its second-largest export, sugar. Coffee and bananas ranked third and fourth, respectively, at $714.5 million and $623.4 million.

The U.S. was the final destination for 79 percent of the apparel and textile exports, while other Central American markets received 14 percent of them; Mexico 3 percent, and Canada 1 percent. Other countries received the remaining 3 percent, with the European Union attributable for less than 2 percent.

De La Torre noted that the country is making significant investments in its infrastructure, including a new rail system, and forging agreements to bolster its industrial base, such as a natural gas arrangement being negotiated with Mexico.