J.C. Penney is moving back into the light.
It was only a year ago that the department-store company was staving off concerns of a bankruptcy. Today, at its first analyst meeting in three years, it rolled out its strategies for its grand recovery plan: to become "the preferred shopping choice for Middle America."
One pillar of that plan is holding on to the company's network of more than 1,000 stores spread across the country. It's not planning on store closures, contrary to some expectations prior to today's presentation — a relief to its retail staff, which went through a torturous phase of job cuts and uncertainty in recent years.
The company is also carrying more of its private-label brands, particularly in the home department, and it's adding additional in-store Sephora and Disney shops. It identified beauty, jewelry and fashion accessories as segments ripe for sales growth, and also talked of beefing up its online and mobile commerce operations.
J.C. Penney became a nationally-watched case study in retailing from 2011 to 2013 as Ron Johnson, the man behind Apple's incredibly successful retail operation, sought to reinvent the chain and turn it into "America's Favorite Store."
Johnson's zealous plans to turn J.C. Penney into a mall-like collection of specialty shops with hot new brands, while eliminating coupons and discount sales, ultimately flopped with customers and caused damaging splits internally. In a single year, the 112-year old retailer lost $4.3 billion in sales, or a quarter of its entire business. Before the situation could worsen, Penney dropped Johnson and brought back the CEO who preceded him. Since then, Mike Ullman has mostly worked to undo changes implemented by Johnson and win back once-loyal customers.
Penney, notably, is "comfortable" with its roughly 1,060 store count, he said, crushing speculation the chain might announce big closures today. The company has a number of small-town stores where they're "the only game in town and the customer is very loyal to us," he added.
Despite its progress, Ullman disappointed investors by saying same-store sales in the third-quarter will only rise in the low single digits versus the mid single digits. The company is facing the unusual conundrum of having less merchandise for sale on clearance, which has caused some shoppers to buy less, he said.
J.C. Penney was working through unsold Johnson-era goods at this time last year, offering up atypical prices on designer items and other merchandise that didn't resonate with its core consumers. Obviously, those deals aren't as plentiful now.
Still, the lowered forecast reflects broader concerns for consumption, particularly for retailers who service Main Street.
Macy's noted in August that many of its customers are still "feeling the impact of an economic environment that at best is improving very gradually." On an earnings call last month, Kraft Foods described the rise of the "strapped consumer," the result of a barbell-shaped economy that has pushed more consumers into low-income brackets. Six in 10 households now earn less than $50,000 a year, which becomes difficult when supporting four to six people, executives said. McDonald's too, discussed the "bifurcation" in discretionary spending between households making less than $45,000, where pursestrings are tighter, against those above $75,000, where spending is "still flowing fairly well."
J.C. Penney said it hopes to win $2 billion in additional sales over the next three years. That still won't get it back to where it was before Johnson took over, but it's certainly a step.
Contact Sapna Maheshwari at email@example.com.