Top officials from J.C. Penney Co. Inc. are sensing improving consumer trends, and at the retailer’s analysts and investors’ meeting in New York on Wednesday, they went public with their limited optimism. “We are not seeing a wild or crazy shift, but there’s been a slight uptick,” said Myron E. “Mike” Ullman 3rd, Penney’s chairman and chief executive officer.
Ullman and others cited a “stabilization” in sales patterns; increasing “visibility” or ability to project and plan; better sell-throughs on promotional merchandise requiring less clearance in the weeks ahead, and gains in the home business due to the industry shakeout and a pickup in house sales.
With signs of improvement, Penney’s revised for the second time its first-quarter earnings per share guidance to flat or slightly positive. Initially, the company was projecting a loss of 20 to 30 cents, and about two weeks ago revised it again to a loss of 5 to 10 cents.
“I never thought flat to slightly positive would look so good,” said Bob Cavanaugh, executive vice president and chief financial officer. “There clearly is a stabilization day-to-day that gives us a lot more confidence.”
Major spring clearances are expected to break in a matter of weeks, but not with the intensity and depth of last fall’s frenzy, because retail inventories are more in line across the industry. “We will see more of the traditional promotions,” said Ken Hicks, Penney’s president and chief merchandising officer.
Ullman said Penney’s is currently demonstrating “one of the best women’s apparel trends in the industry,” with dresses a top-performing category.
Elizabeth Sweney, executive vice president and general merchandise manager, said the company is working harder to “talk to customers about trend and style with great price reassurance” through such strategies as its Little Red Book, a new spring catalogue, and an interactive online runway video. She also cited the recent introduction of exclusive women’s collections I [Heart] Ronson, Allen B., as well as a.n.a. and Bisou Bisou.
Such collections have enabled Penney’s to take market share from key competitors in certain sectors, and the company is continuing with the launch of exclusive brands. In men’s wear, the executives have high hopes for the Joe Joseph Abboud line of sportswear, tailored clothing and furnishings, which will hit stores in September. The line will be exclusive to Penney’s beginning this fall. Currently, the collection is sold in fewer than 50 department store doors, including Macy’s.
Steve Lawrence, executive vice president and general merchandise manager of men’s for Penney’s, acknowledged hits and misses in American Living, which is adjusting prices downward on certain items.
Three new young men’s brands for back-to-school — RS by Sheckler, Rusty and Third Rail, a Zoo York Production — will be introduced.
“In tough economic times,” Lawrence said, “we gravitate toward offering value as well as newness. We’re trying to get on the offensive and make bold moves.”
Ullman surprised some of the analysts by alluding to the possibility of acquisitions, saying the company is “not averse to buying something if it’s a better format than building something.…It is quite clear that there is a lot of runway available to us with our existing concept. There is a lot of opportunity for in-fill in markets where we are not represented.”
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