JC Penney sets out three-year growth plan
The retailer is moving back to a merchandising model marked by narrow and deep assortments
Retail giant JC Penney Company has outlined plans it hopes will return the business to sustained and profitable growth at an analyst meeting in New York.
The three-year strategy identifies three areas of the business expected to generate incremental sales growth between 2015 and 2017, including the revitalising of the stores’ “centre core” as a destination for fashion accessories, beauty and jewelry.
JC Penney will also aim to maximise the “power, reach and integration” of its omnichannel capabilities.
The retailer will look to open more than 100 Disney-branded shop-in-shops by back-to-school 2015, as part of plans to achieve US$1.2bn in EBITDA by 2017.
The company “conservatively” expects to gain $2bn in incremental sales over the next three years, resulting in mid-single digit sales growth during the period.
However, it also moved to revise downwards its third quarter sales guidance, with comps likely to be in the low single digits, thanks to a “softer” September reflecting lower levels of clearance than last year and the still difficult retail environment.
“JC Penney is in a far stronger position today than it was when we began our turnaround effort 18 months ago,” said CEO Mike Ullman III.
“While we recognise that there’s more work to be done in a highly competitive retail environment, I couldn’t be more encouraged by the significant progress our teams have made in such a short amount of time.”
“I am confident that the initiatives we are putting in place will fuel new growth and earn greater customer loyalty as we pursue our vision to become the preferred shopping choice for Middle America.”
The US department store retailer in August revealed signs of progress in its turnaround after second quarter losses narrowed to US$172m from $586m, and group sales grew 5.3% to $2.8bn.
Speaking on the firm's follow-up earnings call, CFO Edward Record said JC Penney's "key priorities" moving forward will focus on merchandise, omni-channel and marketing.
To read an earlier insight into JC Penney, click on the following link: IN THE MONEY: JC Penney emphasises new merchandising strategy.
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