In the third quarter, JC Penney (JCP, Financial) witnessed considerably lesser clearance in the ongoing summer merchandise on the floor as compared to the previous year. The clearing sales merchandise declined approximately 30% in the quarter, whereas the go-forward fall goods sales increased in mid single-digits.
Looking ahead
The liquidation of brands and the spring merchandise last year by Penney, particularly in kids and home segments that could not attract the customers drove considerable volume in the previous year although at extremely low margins. In addition, with the start of the winter season in the country, there’s huge improvement in sales trends for seasonal categories such as fleets, cold weather accessories and outerwear.
Going forward into the fourth quarter, Penney expects to expand its business in the range of 2% to 4%, and capture extra market share. Penney targets on growing this quarter by delivering superior-quality fashionable and unique merchandise assortments enabled by accelerated promotional advertising campaign communicating exciting deals to customers at an affordable price.
JC Penney is the preferred choice of customers for exploring unique value, quality and style in the overall shopping scenarios such as Holiday and back-to-school. This year, the company is quite confident about customers once again choosing JC Penney for important holiday gifts fitting their budget.
National brands in focus
Penney also has an extreme focus on national brands. It has developed an exceptional relationship with several key brands in the country. Customers can choose JC Penney for exploring several most popular national brands such as Van Heusen, Dockers and Carter’s, IZOD, Alfred Dunner, Levis and Nike.
Penney is increasingly becoming a leader in the omnichannel retail in Middle America with enhanced functionality needed by customers, which is again getting better. Penney is strengthening its Find It, Keep It strategy by leveraging its ship from store optionality to enhance its enterprise inventory.
It plans to launch an innovative same-day pickup alternative next year in nearly 250 to 350 stores. It also recently released a fresh and enhanced iPhone App providing its customers with better mobile shopping experience.
It is focused on three key incremental growth aspects which are believed to significantly accelerate its top line growth in the next three years.
These initiatives include first, reinforcing and stimulating the merchandise deals for its stores, and online. It is believed to become a leader in Sephora and Fine Jewelry businesses for fashion jewelry, fashion accessories, women shoes and handbags. These hugely popular categories are estimated to generate significant cross-shopping opportunities for Penney.
Second, JC Penney must maintain its home store to its earlier levels of sales productivity. Hence, Penney would be able to achieve incredible assortments, accelerated marketing initiatives and private brand merchandise for delivering superior value, quality and style that enables market share expansion and growth.
And lastly, the management is focused on increasing the usage of its omnichannel capacities and strengths for accelerating the visits of omnichannel customers and enhanced spending, thus driving excellent growth for JC Penney.
The loss for JC Penney lessened in the September quarter with the retailers on a spree to cut costs significantly, leading to lower reduction in sales.
Conclusion
Thus, Penney is making the right moves to grow its business, and this is why investors should consider buying the stock for long-term gains.
