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J.C. Penney Idea Proposal (JCP)

J.C. Penney Idea Proposal (JCP)
 

Will J.C. Penney’s turnaround effort regain momentum or stall in 2017?

Report Available: January 19, 2017

 

Blueshift’s initial research shows JCP hitting a third-quarter speed bump in its recovery, but expressing optimism about Q4 as the company’s return to appliance sales appears to be off to a good start. While clothing retailers were hurt by warm fall weather, they could get a boost from a frigid December. JCP is also hoping to capitalize on the misfortunes of SHLD and M.

 

Observations

  1. JCP’s turnaround hit a snag in Q3 as the retailer’s comparable-store sales fell 0.8% compared to a year earlier, weighed down by poor apparel sales. Still, the department store giant managed to cut its net loss and executives said they remained on track to post $1 billion in EBITDA for the full year, a remarkable feat for a company that was teetering on the edge just a couple of years ago.
  2. JCP is pushing to improve sales and margins by increasing its mix of private label brands and big-ticket items such as appliances and furniture. The company has now rolled out appliance showrooms to 500 stores and said such items drove sales volumes online and in stores around Black Friday. The retailer, whose Q3 clothing sales were hurt by warm weather, could benefit from what is expected to be a very cold winter, with one analytics firm predicting a $350 million boost in December apparel sales across the industry.
  3. Many of JCP’s key competitors continue to struggle. SHLD recorded a $748 million loss in Q3 as established store sales fell 7.4%, while M’s comparable store sales declined 3.3%. As SHLD and M continue to close stores, JCP could gain some foot traffic, though some of the malls where JCP goes head-to-head with those rivals could suffer.
  4. In Blueshift’s May 6 report, JCP store personnel and suppliers expressed optimism that the retailer could sustain its recent momentum. They reported increased foot traffic, encouraging results from early tests of large appliance sales, an improved online channel, and faith in the new management team. Associates in four JCP stores that have started selling appliances said sales were meeting or beating expectations thanks to price matching and attractive financing offers, and two said their appliance department’s layouts will get bigger. Employees in six other stores that expect to add appliances this year said they believed the big-ticket items will be a hit with customers.

 

How are appliance sales at JCP stores? What is the average ticket of the appliances? Are the retailer’s Home sales getting a boost from Ashley Furniture being tested in JCP stores? How was Q4 store traffic? What effect is the challenging retail environment having on JCP’s turnaround efforts? To answer these and other questions, Blueshift will gather data and issue a market research report from Store personnel, Suppliers, Competitors, and Industry specialists.

 

Companies: J.C. Penney (JCP), Sears (SHLD), Kohl’s (KSS), Dillard’s (DDS), Macy’s (M), Nordstrom (JWN)

 

Research Begins: Jan. 3, 2017