PLANO, Tex. — J.C. Penney Co. wants to be the preferred shopping choice for middle America, chairman and chief executive Myron E. Ullman 3rd said Friday as he presided over his first annual shareholders’ meeting since joining the $18 billion chain in December.
Ullman told about 200 people the 1,017-unit retailer is poised to grow its multichannel store, catalogue and Internet businesses with a five-year agenda which focuses on fashion and “styles that inspire,” along with value, quality and effective communication with its associates and its customers.
“Our long-range plan is focused on serving our customers and growing our business,” he said. “Working together, we will take our performance to an industry leadership level.”
He noted Penney’s stock price went up 54 percent in 2004, its Internet business hit $800 million with $1 billion planned in 2005, EBIT levels were 7.1 percent last year and debt was reduced by $1.7 billion, because $3.5 billion in net proceeds was gained from the sale of the Eckerd chain.
“All the mergers taking place in retailing now are creating turmoil for the consumer, and we see this as being an even more important time to focus on and make an emotional connection with middle-income customers, which are the sweet spot of our business,” Ullman said.
At least half of Penney’s volume is generated by shoppers who are 35 to 54 years old, with annual incomes of $35,000 to $85,000, he said.
In addition, Ullman said Penney’s is committed to new-store growth and plans to build 12 to 20 off-the-mall stores each year over the next five years, with $2.4 billion earmarked to remodel units and $270 million a year to build stores.
In a meeting with Wall Street analysts here last month, Penney’s executives said that, within five years, they are aiming for operating profits to increase to 9.5 percent of sales from 7.1 percent last year, and to generate a 15 percent return on equity and a 20 percent return on capital compared with 12.3 percent and 8.3 percent, respectively, in 2004. Last year, Penney’s had 2 percent annual store-to-store increases, and the chain is planning low-single-digit comp-store gains in 2005.
For its latest fiscal year ended Jan. 29, Penney’s had earnings of $524 million, or $1.76 a share, compared with a loss of $928 million, or $3.13 a share, a year ago. Revenues grew 3.6 percent to $18.24 billion from $17.79 billion.