QUESTROM SEES PROGRESS IN TURNAROUND, NO SELL-OFFS SOON
Byline: Rusty Williamson
DALLAS — J.C. Penney Co. could try to sell off its department stores in Brazil and the Eckerd drug store division to raise money to beef up Penney’s core department store business. But based on comments from chairman and chief executive officer Allen Questrom on Thursday, no sale seems imminent.
“Keeping Eckerd has been a big key to keeping our stock price up,” Questrom noted. He said Penney’s might consider selling Eckerd in two to three years, that it has renewed strength, is currently worth about $6 billion and has the potential to nearly double in value in three to four years. Eckerd’s sales last year accounted for $13 billion of Penney’s total volume of $32 billion.
Questrom added that Penney’s has no plans to sell its 54-unit Lojas Renner chain in Brazil, that country’s largest department store chain, though he added: “Of course, we’ll sell anything if anyone offers us the right price.”
Questrom’s response to the speculation came right after his speech at the Management Briefing Series luncheon by Southern Methodist University’s Cox School of Business and Ernst & Young, entitled, “Timeless Values: Gateway to the Future.”
Most of his remarks were about Penney’s turnaround efforts. “We had been losing business for five years and had lost our focus, but now we’re back in the ball game,” he said. “We’re making some revolutionary changes to achieve these positive changes. We’re on the way, but it’s a two- to five-year project.” Although Penney’s isn’t really shifting its demographics as a moderate department store, and is continuing to serve “Mr. and Mrs. America,” Questrom believes Penney shoppers want “Neiman Marcus fashions at J.C. Penney prices. That’s our vision.”
He also said the company is planning for a 2 percent comp-store gain this year and that Penney’s is gaining momentum, with improved sales, particularly in women’s. Fashions are edgier and landing faster in stores, he said. Penney’s celebrates its 100th birthday April 14, the day after Questrom turns 62. He also said the chain had raised its annual ad budget by $100 million since he joined the company.
“We want to give great fashion and quality at low prices. And we’re renovating our stores. But we still believe that ultimately, consumers come to Penney’s for the product. We’re adding more fashion to our mix. It’s moving much faster and closer to cycle. Internal brands are becoming more important.”