Home, beauty and fine jewelry led JC Penney to a 3.4 percent holiday sales increase - Dallas News
J.C. Penney CEO Marvin Ellison said Thursday that efforts to improve online sales, update women's apparel, add toys and other categories and growth in home together contributed to a stronger finish to a tough year for the Plano-based retailer.
Penney's home strategy to gain customers from Sears, which has continued to see results deteriorate, worked this holiday season, Ellison said during an interview Thursday.
"Home initiatives are part of our competitive plan against Sears as it continues to contract as a brick-and-mortar retailer," Ellison said.
Penney posted a 3.4 percent sales increase during the November-December period as home, beauty and fine jewelry led the store. He credited women's apparel, which has been a drag on results, for some of the improvement. Women's and kids apparel posted "dramatic improvements" since the third quarter. The men's business remained strong all year, he said, and children's was the retailer's best performing apparel category during Christmas.
A better-than-expected double-digit sales increases in online sales was one of the holiday season's big surprises, Ellison said.
Penney spent much of 2016 and 2017 getting its online business in shape after falling behind competitors.
E-commerce is posting double-digit sales increases, he said and online sales were driven by gift categories of fine jewelry, home décor, luggage, toys, boots and athletic shoes. With the Toys R Us bankruptcy, big brands such as Lego, Barbie and Star Wars were "very interested in doing business with us," Ellison said. Toys are now a year-round category in Penney stores.
"Our ability to execute e-commerce fulfillment from 100 percent of our brick-and-mortar stores helped fuel the growth in e-commerce for the holiday season. We remain confident that our strategic initiatives are taking hold and resonating with customers," Ellison said.
Last Christmas the company would run out of stock from its three dotcom fulfillment centers, but this year it was able to fill more of those orders from the store nearest a customer, he said. Also, Penney had 70 percent more items listed online and shoppers took advantage of buy online and pick up in store particularly towards the end of the season.
Store closings
Penney closed 138 stores last year and now has 875. It succeeding in keeping more customers from closed stores through both marketing efforts and digital strategies that would redirect searching customers either online or to the nearest store, he said. "In the past, when we closed a store, we would also lose that customer online."
There are no plans to close that many stores again this year, Ellison said. "We're going through our portfolio of stores now and reviewing them, but we're not planning anything remotely close to last year."
Plano-based Penney also reaffirmed guidance that had been lowered in recent months as the company failed to meet projections and saw its stock price decline 60 percent in 2017. But, Ellison said, the company is "very encouraged" with the overall sales increase during the November-December period. A year ago, Penney's holiday sales fell 0.8 percent.
Not terminal
But Wall Street remains uncertain. Penney's stock price was down in trading today and closed on Wednesday at $3.70 a share.
Gordon Hasket Research Advisors analyst Chuck Grom said women's and kids apparel improvements and stores filling online orders are two factors that "should give the company some wind at its back" in 2018.
"After an extended period of weaker performance and downgraded expectations, these holiday results come as something of a relief and should help to ease fears that Penney is in terminal decline," said Anthony Riva, analyst at GlobalData Retail. However, he said, Penney has a lot of work to do as traffic returns back down to more normal levels to give customers reasons to visit.
