JC Penney

PLANO, Tex. — J.C. Penney Co. Inc. is not out of the woods, but it expects this year to post its first positive earnings per share since 2010.

Speaking at the annual meeting at company headquarters, president and chief executive officer Marvin Ellison projected the retailer would post $1 billion in earnings before interest, taxes and depreciation in 2016. At the same time last year, he had called for $1.2 billion in earnings before interest, taxes and amortization by 2017.

“We admittedly had a slower first-quarter in revenue than we had anticipated,” he acknowledged. “However, we still outperformed every one of our key competitors during that time frame and believe that we can still deliver a strong financial year in sales, gross margin, [selling, general and administrative expenses], and our adjusted EPS, which we believe will be our first positive EPS since 2010.”

Last week the retailer reported a 1.6 percent decline in first-quarter sales and a net loss of $69 million, or 22 cents a diluted share — an improvement over the prior year. Revenue for the three months ending April 30 decreased to $2.81 billion from $2.85 billion a year earlier, while comparable sales slid 0.4 percent.

Ellison’s game plan calls for strengthening private brands, continuing to elevate omnichannel performance and wringing more money out of existing customers through new merchandise initiatives.

He gave no details about private brands except to say the company had 200 designers and was working to make its labels “stronger and better, which drives differentiation and creates more profit.”

Omnichannel functionality has been a priority since Ellison came aboard, but he admitted the company is still behind. Progress has been made in mobile sales and by the end of August, all stores will have the ability to fulfill an order that a shopper bought online the same day.

“We have virtually the same number of active customers, who shop us at least once a year, today as we had back in 2011, with $5 billion less revenue,” Ellison pointed out. “We have to create more opportunities for customers to shop us more frequently and buy more when they come in.”

In-store Sephora shops are one of the firm’s best performers and will be rolled out to 60 more units this year for a total of 600, he noted. In addition, the “center core” accessories departments next to Sephora will be upgraded by the end of the second quarter, he added.

The company began selling 1,200 appliances online this week and is rolling the category out to 500 locations, he noted.

“We heard loud and clear from our customers that if we sold appliances they would buy them from us,” he explained. “In test locations, we are very pleased with the results, and as the benefactor of that, we should have these in 500 stores this year, and we think that will give our customers a reason to spend more with us.”

Ellison also cited a co-branding relationship with Disney for Okidoki children’s clothing and the rebranding of its 800 salons with InStyle as important partnerships.

He also thanked company chairman Myron E. “Mike” Ullman for his guidance during the firm’s darkest days.

“Mike ran the company at a time when it performed at its highest level,” Ellison said. “In a very gracious manner, he came back during the most difficult time in the company’s history to take on what people thought was an impossible situation. Without his stewardship, steady hand and leadership, I can easily say this great company would not be here.”

Only one shareholder stood to ask a question, asking whether restructuring costs due to management changes would decline and when several lawsuits might be wrapped up.

Ellison responded that costs would go down as he has a team in place, and Ullman replied that he could not comment on litigation.

load comments
blog comments powered by Disqus