JCP - JC Penney

[txlaw]

Fantastic posts, C9, Plan, et al.

 

Keep 'em coming.

[bargainman]

There was a time when owning an Apple computer wasn't cool, but now people are addicted to their products. Customers like having a quality experience at a fair price, and that is exactly what JCP is offering. I would argue that it will be easier for them to change their image in the minds of customers than it is for other companies, because they are only a shop selling other company's brands. Having Levi's, Sephora, and other good brands under their roof will do some of the work for them.

 

Um... not so sure about the Apple comment.  Even at the bottom of their darkest time before Jobs came back their users loved them.  With a cult like passion sometimes.  I remember reading some article about Jobs talking to either Ellison or Schmidt.  E/S wondered why Jobs wanted to go back to a dying company.  His answer was the cult like following. He said that Apple could put out a piece of crap and still they would have a line of people waiting for their crappy product.  Now imagine what would happen if they put out a great product...

 

I don't see any cult like passion for JCP.  I'm also not sure about the 'quality experience at a fair price' comment, especially in this economy.  There is so much competition around in retailing I don't know how much the retailer really matters.  There's no loyalty to big box retailers anymore as far as I can tell.  Amazon, Costco, Kohls, Ross...  Does JCPenny's really compete with them favorably wrt 'quality at a fair price'?  I don't know, maybe they do.  I just know that the last time i was at JCPenny's was over 15 years ago, and I have no desire to go check them out...  But i'm probably not in their target market either...

[mysticdrew]

On brand perception... definitely takes time to change but I believe it can be done. Look at what Hyundai and Kia are doing.  They still have a low brand perception among many, but looking at the quality cars they have been putting out lately, the brand campaigns/sponsorships, and their sales numbers... they seem to be righting that ship.

[Kraven]

On brand perception... definitely takes time to change but I believe it can be done. Look at what Hyundai and Kia are doing.  They still have a low brand perception among many, but looking at the quality cars they have been putting out lately, the brand campaigns/sponsorships, and their sales numbers... they seem to be righting that ship.

 

I agree with this.  Its tough, but can be done.  I can think of a number of examples though.  I remember The Gap when I was a kid was awful.  Horrible clothes and I hated going there .  Then they switched to t-shirts and jeans and the like and away they went.  Do people remember Target from years ago?  It was a second rate "discount" retailer.  It was essentially a K-Mart like store.  People now think of the nickname "Tarzhay" as reflecting their cheap and "chic" clothes.  I remember when it was a total rip on them.  It wasn't originally something that was favorable.

[PlanMaestro]

Picture of the new Liz Claiborne store

http://www.dallasnews.com/business/retail/20120829-j.c.-penneys-in-store-shops-to-feature-new-brand-stalwarts.ece

 

More details

http://investing.businessweek.com/research/stocks/news/article.asp?docKey=600-201208300348KRTRIB__BUSNEWS_36060_21804-1&params=timestamp%7C%7C08/30/2012%203:48%20AM%20ET%7C%7Cheadline%7C%7CJ.C.%20Penney's%20shops%20to%20feature%20new%20brand%2C%20stalwarts%20%5BThe%20Dallas%20Morning%20News%5D%7C%7CdocSource%7C%7CKnight%20Ridder/Tribune%7C%7Cprovider%7C%7CACQUIREMEDIA%7C%7Cbridgesymbol%7C%7CUS;JCP&ticker=JCP

 

 

Bright neon yellow doors frame the entrance of J.C. Penney's new Liz Claiborne women's shops that open in almost 700 of its stores this weekend.

 

Also in stores on Sept. 1 are shops for the new jcp apparel brand in men's and women's. The line includes fashionable basics such as shirts, sweaters, blazers, cords and jeans reminiscent of those found at J. Crew. The sweaters are made of a soft combination of cotton and cashmere blends.

 

"We're so proud of that brand, we put our name on it," said Penney's chief merchant, Liz Sweney. Corporate staffers in Plano have been wearing the early samples from the line, pink checked shirts for women and orange for men.

 

Jcp clothes "are the building blocks of a wardrobe," Penney CEO Ron Johnson said last month during a sneak peek at Penney's new shop layout.

 

Last year, Penney paid $268 million for worldwide rights to the Liz Claiborne brand.

 

The bright yellow door color is repeated on the back walls of Liz Claiborne shops, framing a mirror and creating a focal point, Sweney said. Some criticized Penney for paying so much for the brand, which had been sold in traditional department stores like Macy's and Dillard's, but, Sweney said, "This brand has been really successful for us."

 

Penney has been selling Liz Claiborne casual wear and some dresses, and it expanded into career wear and a smattering of active wear in the new shops.

 

"That's what the Liz Claiborne brand always has been, a lifestyle story, and those are the categories Liz included when she created the brand," Sweney said. The shop will include accessories and handbags and lots of mannequins displaying outfits.

 

Penney's first six shops opened earlier this month and were all about denim and back-to-school.

 

September's additions address a different end of the wardrobe spectrum and include an Izod men's shop from longtime Penney supplier PVH Corp. (formerly known as Phillips-Van Heusen Corp.).

 

Penney has heard a constant drumbeat of criticism from Wall Street, and some say Johnson earned the criticism with worse than expected 20 percent sales declines and big quarterly losses. Through it all, Penney has stayed true to the timetable it spelled out in January.

 

Johnson's plan to transform the department store into a collection of 100 shops, which he more recently has described as "a mall within a mall," is on track.

 

As Penney adds brands, others are going away. East 5th and a few other work wear brands have been eliminated as Liz Claiborne moves into career wear.

The jcp brand eliminates St. John's Bay for women. Penney will still carry St. John's Bay for men but has transformed it into a smaller men's outdoor apparel label, Sweney said.

 

People who don't like wearing brands on their pockets will like jcp. "No label showing. Not everyone needs a critter on their shirt," Johnson said.

 

J.C. Penney stock, which has been in the dumps, has been climbing in recent days, and some analysts credited Wednesday's 4 percent increase to the debut of the next round of shops.

 

Penney's stock price gained 93 cents to close at $26.23 a share, its highest level in three months.

[PlanMaestro]

Pictures of the new stores-within-the-store from Portland

 

http://www.peridotcapitalist.com/2012/09/an-inside-look-at-the-new-retail-strategy-at-j-c-penney-part-1.html

[ClientNine]

Interesting to see that the customer behavior in Portland mirrors the behavior I've been seeing in SoCal -- in fact, it's identical.

 

I think we're looking at another ugly quarter. I expect the comp to be negative 20% or worse. That said, I don't think there is another inventory write down coming, since the company was pretty clear that they've reserved for all the charges the expect to take there. And restructuring charges associated with the $900MM+ SG&A savings should be less this quarter, too.

 

Put it all together, along with a sales run rate around $13 billion annually, and JCP should be generating EBITDA of ($100M) to $100M. My guess is just above zero, given management comments from the Q2 earnings call.

 

The company can handle a $13 billion annualized revenue run rate, but not for long, especially if they want to hit the pace of 100 stores by YE 2015. I hope someone asks this at the Goldman Sachs conference tomorrow. The stock would take a big hit if they have to pull back on their capex & transformation plans.

 

Best,

C9

[bargainman]

On brand perception... definitely takes time to change but I believe it can be done. Look at what Hyundai and Kia are doing.  They still have a low brand perception among many, but looking at the quality cars they have been putting out lately, the brand campaigns/sponsorships, and their sales numbers... they seem to be righting that ship.

 

I agree with this.  Its tough, but can be done.  I can think of a number of examples though.  I remember The Gap when I was a kid was awful.  Horrible clothes and I hated going there .  Then they switched to t-shirts and jeans and the like and away they went.  Do people remember Target from years ago?  It was a second rate "discount" retailer.  It was essentially a K-Mart like store.  People now think of the nickname "Tarzhay" as reflecting their cheap and "chic" clothes.  I remember when it was a total rip on them.  It wasn't originally something that was favorable.

 

I don't know.  Hyundai, Kia, Apple, and Gap are their own brands in their own specific areas and produce identifiable products.  Cars, Computers/Phones, clothes.  I'm not sure what you associate with JCPenny's.  Clothes?  I don't think I know anyone who says they got clothes at JCPenny's.  Nordstrom, American Eagle, maybe..  It's a big box retailer.  I just don't understand how the model isn't broken. They don't manufacture any particular branded identifiable product do they?  Do they just carry other brands? 

[DCG]

Pictures of the new stores-within-the-store from Portland

 

http://www.peridotcapitalist.com/2012/09/an-inside-look-at-the-new-retail-strategy-at-j-c-penney-part-1.html

 

From those pictures, it looks like like Macys to me.

 

And this quote stood out: ". In fact, while we were there my wife overheard a female shopper ask for some help finding a pair of new jeans. The employee walked her over to the Levi’s shop, but then told her, unfortunately, that there were jeans scattered around the store, so although this was the best place to start, she would have to walk the entire floor to see everything they had."

 

-that is what I don't really like about shopping in stores like Macy's.

[mysticdrew]

On brand perception... definitely takes time to change but I believe it can be done. Look at what Hyundai and Kia are doing.  They still have a low brand perception among many, but looking at the quality cars they have been putting out lately, the brand campaigns/sponsorships, and their sales numbers... they seem to be righting that ship.

 

I agree with this.  Its tough, but can be done.  I can think of a number of examples though.  I remember The Gap when I was a kid was awful.  Horrible clothes and I hated going there .  Then they switched to t-shirts and jeans and the like and away they went.  Do people remember Target from years ago?  It was a second rate "discount" retailer.  It was essentially a K-Mart like store.  People now think of the nickname "Tarzhay" as reflecting their cheap and "chic" clothes.  I remember when it was a total rip on them.  It wasn't originally something that was favorable.

 

I don't know.  Hyundai, Kia, Apple, and Gap are their own brands in their own specific areas and produce identifiable products.  Cars, Computers/Phones, clothes.  I'm not sure what you associate with JCPenny's.  Clothes?  I don't think I know anyone who says they got clothes at JCPenny's.  Nordstrom, American Eagle, maybe..  It's a big box retailer.  I just don't understand how the model isn't broken. They don't manufacture any particular branded identifiable product do they?  Do they just carry other brands?

 

I see what you're saying, but I don't think brand and perception value is limited to just firms that make their own identifiable products and that retail stores can have a brand/perception.  Target doesn't make it's own products or brands but was able to change it's perception in the market place which helped turn them around.  JCP is trying to differentiate with the shopping experience and providing a lower cost foot print for other brands to sell there.  I'm not saying it'll work but I think perception is important and it can go either way, up or down.

[PlanMaestro]

J.C. Penney and Cosmopolitan magazine: Sexy pairing or scary?

http://www.latimes.com/business/money/la-fi-mo-jc-penney-cosmopolitan-20120906,0,4228941.story

 

It’s an unlikely pairing: Cosmopolitan, the magazine known for its frank sex advice and sultry photo spreads, will debut a line of products for J.C. Penney, the struggling retailer often associated with dowdiness.

 

Cosmo announced Thursday that it has launched a collection of lingerie, sleepwear, shoes and handbags – all imbued with a “fun, fearless female” vibe – exclusively at J.C. Penney. The products are available at more than 600 stores nationwide and online.

 

The styles were created by Cosmo’s editorial team in tandem with design teams from J.C. Penney. To wit – leopard-print panties, satiny robes and nighties, snakeskin-patterned clutches and more. The most expensive items – footwear – will top out at $95.

 

J.C. Penney has recently tried to boost sales by reworking its pricing structure and undergoing a brand revamp. The company said it plans to lay off hundreds of workers.

 

Earlier this week, Cosmo hired former Marie Claire editor in chief as its own top editor, replacing longtime boss Kate White. The Hearst Corp. publication was the top-selling magazine in the country in the first half of the year, though sales fell nearly 16% to 1.4 million.

 

J.C. Penney is hoping Cosmo’s strategy for success also works in retail, even if it means taking on a saucier attitude.

 

[ItsAValueTrap]

A writeup on VIC:

http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/68896

 

-----

Interview with Ron Johnson.

http://tech.fortune.cnn.com/2012/07/18/transcript-ron-johnson/

 

JENNIFER REINGOLD:  So the way you roll it out, it sounds like, you know, why doesn't everybody do this?  Wal-Mart has tried and struggled with RFID.  It's very expensive; correct, right?

 

RON JOHNSON:  Yes.

 

JENNIFER REINGOLD:  I mean I understand you're saying that on the back end, you're going to end up saving if it this works.  But why do you think everybody else hasn't done this?

 

RON JOHNSON:  You know, I don't know.  I can't talk for someone else, but RFID clearly is a technology that's been waiting for prime time based on the cost of the ticket.  You know, I believe the ticket cost, the increase in the ticket cost versus UPC label is now at a point where the benefits way outweigh the cost of doing it.

 

(*Disclosure: I guess I am short.)

[ItsAValueTrap]

 

Nina Garcia (consultant for JCP) twittered:  Gentleman, this is for you

 

Purple and orange?  Let's see how JCPenney customers respond.

[PlanMaestro]

Purple and orange?  Let's see how JCPenney customers respond.

 

Yes, not sure about that one: orange and purple mixed with sienna signals that they wanted to take risks but didn't ... getting the worst of both. (RR: wife disagrees and the clothes look good from a distance)

 

But women's jcp looks like a winner  (Lacoste palette)

 

https://twitter.com/jcpenney/status/241624527115796480/photo/1

[ItsAValueTrap]

Does anybody have insight on Sephora as a retailer?  From what little I know, it is a really top notch business.  When I walk through Eaton Center here in Canada, McD's Sephora and the Apple store are the busiest businesses.

 

The whole Sephora inside JC Penny concept will likely be a success judging from the following message board:

http://community.sephora.com/t5/Stores-Services/What-do-people-think-about-Sephora-being-in-JCpenny/td-p/117957

 

People *love* Sephora.  As far as I can tell, people love their selection (they want their favorite products... substitutes won't quite do), they love the benefits program (which sort of goes against JCP's price integrity thing), and they like the customer service (though if you search yelp.com customer service depends on the person and it's hit or miss).  This love for Sephora extends to Sephora inside JCP... a lot of people are so glad that a Sephora (in JCP) is opening near them.

 

On glassdoor.com, Sephora's employee satisfaction is good.

Sephora 3.3

Mac 3.3

Bath & Body Works 3.2

Lush 2.9

Ulta 2.7

 

Target 3.2

JCPenney 3.0

Kohl's 3.0

Macy's 2.9

Sears 2.6

 

[PlanMaestro]

Does anybody have insight on Sephora as a retailer? 

 

Part of LVMH and reports under the retail division. Had very good numbers last time I checked: double digit margins and growth. One of the must follow stories in European retail (IKEA, Inditex, H&M, Aldi, Tesco).

[paologorgo]

http://www.businessweek.com/news/2012-09-19/j-dot-c-dot-penney-ceo-shows-300-analysts-test-store-in-dallas

 

J.C. Penney Co. (JCP) Chief Executive Officer Ron Johnson showcased a private prototype of the retailer’s new store layout to 300 analysts in Texas yesterday as he works to persuade investors to back his turnaround plan.

 

“Really, for a long-term investor to understand what we’re trying to do, there’s nothing like seeing to understand,” Johnson said in opening comments to the group, which included activist investor Bill Ackman, who backs his strategy.

 

The 30,000-square-foot prototype, located on the third floor of a J.C. Penney store in a Dallas mall, began taking shape in May, when Johnson’s management team started “to move from an idea into an art project,” he said.

[ItsAValueTrap]

http://www.businessinsider.com/jcpenneys-new-shops-succeeding-2012-9

 

"New shops inside JC Penney rocking +20% comps versus rest of store."

 

So if my math is not mistaken... that would make the new stores comparable in sales to the old JCP.  However, the rest of the store would still have stores lower than the old JCP.

 

2- Smaller older JCPs aren't getting the new stores and an analyst at analyst day asked what the plans were.  I can't remember the answer... he said something about whether the investment not being worth it... but basically the old stores are not going to turn into malls-inside-a-mall anytime soon.

 

3- Bill Ackman is really buying into Ron Johnson's plan and was excited at the analyst day.  I don't see the CEO changing.

 

4- Sephora is seeing double-digit comps and new Sephoras will be a little larger.  I agree with the larger Sephoras as customers value the larger selection.  (They have favorite products and substitutes aren't the same.)  *However, sometimes customers do like smaller Sephoras if the customer service is better.

 

Sephora inside JCP is a great idea.

 

5- Ron Johnson made a comment that implied that some of the new colors (specifically purple and orange) were fashion misses.  I'm not surprised.

[PlanMaestro]

http://online.wsj.com/article/SB10000872396390443890304578006713878663092.html?mod=googlenews_wsj

 

J.C. Penney Co.  Chief Executive Ron Johnson on Wednesday essentially wrote off the rest of the 2012 for the department store chain, saying the second half of the year would be just as painful as the first.

[PlanMaestro]

Pictures from Iowa

http://beckyhiu.blogspot.mx/2012/09/jcp-my-personal-shopping-tour.html

 

J.C. Penney CEO Ron Johnson has plans for Penney’s smaller stores

http://bizbeatblog.dallasnews.com/2012/10/j-c-penney-ceo-ron-johnson-has-plans-for-penneys-smaller-stores-says-his-no-1-christmas-wish-is-traffic-in-the-stores.html/

[PlanMaestro]

Ellen at JC Penney (showing the new shops)

http://wildfire.gigya.com/wildfire/WidgetPreview.aspx?ut=dBFII5RbVxUc8nBdc3bMDT7hmmrIvgen1wCG_dxqadJhAAWkNZSIhV-1DGKZvwZ0-DQUg5JS8Y61ukrjwOp8p81S9pP6R_BhovjemyHtbA0dAsx-PMuL2zIosIac-rUvj3lTh1WL6rg0IY1bFO3pdiq0GQ8TwM6enbZKtH_hLTWs8vQjDY3Qox9rE89GXwqHRATmJU7YSSScx6WsrFePmwTEY6WoFr9eIutGfHBmm5dzV4IErAzMSZ_mLW4JoxDY6WpdyJfyPgSRBD7GeKUqGA..

[Guest bengrahamofthenorth]

Looks like Johnson is back peddling on the elimination of coupons for some. I'm sure its a way of getting former customers back in the store but it looks desperate to me. 

 

http://www.reuters.com/article/2012/10/11/us-jcpenney-coupon-idUSBRE89A1E220121011

 

"Johnson's email, which says one of Penney's core values is that a shopper should not have to wait for a sale or coupon to get a great value, includes a $10 "gift" to thank patrons for their loyalty. It can be used for an in-store purchase until November 4."

 

 

[PlanMaestro]

Another investor takes a walk.

http://www.gurufocus.com/news/192562/jcp--a-consumer-perspective

[JRH]

Kaboom!

 

http://www.reuters.com/article/2012/11/09/us-jcpenney-results-idUSBRE8A80RW20121109

[maxprogram]

The relevant section from that article:

===

 

The company is generating $269 of sales per square foot at the eight boutiques introduced in August and September, which include Levi's and PVH Corp's (PVH.N) Izod as well as a new private "jcp" brand, compared with $139 in the old parts of its stores.

 

In a statement when the quarterly results were made public, Johnson, who took the reins at J.C. Penney a year ago, said this was a "tale of two companies," with the old Penney still struggling and the new stores surpassing his expectations.

 

But the boutiques, which Penney expects to complete by 2015, and which will eventually house brands such as Martha Stewart, Nanette Lepore and Michael Graves, still represent only 11 percent of the company's selling space in its stores.

 

Despite the sales hemorrhage, Johnson has the full backing of activist investor William Ackman, whose Pershing Square Capital Management is Penney's largest shareholder and who was at Friday's presentation.

 

"It's about the shops. That's the future of the company," Ackman told Reuters.