JCP Sees Tax Rebate Lifting Back to School Sales

By Cecile B. Corral -- Home Textiles Today, 5/5/2008 12:00:00 AM

New York —

The income tax rebate checks set to start rolling out in May and through July will have a modest effect — but one that JCPenney is likely to take advantage of during back-to-school, said Mike Ullman, chairman and ceo of JCPenney last week at the Lehman Bros. 11th Annual Retail and Restaurant Conference.

Regarding the effects on JCP's core customer — who Ullman described as "Middle America" — the 1,073-unit mid-tier department store is admittedly "a little concerned that the $60 billion fuel price increase over the last year will have zapped a bit of the spending power coming out of the stimulus checks. We're not really quite sure how much will be invested in reducing their debt, how much will be invested in savings. But clearly, that will be a factor."

Buoying spirits at JCP is the upcoming back-to-school period, which Ullman said is a season "we do own … in terms of customers' reaction to spending." The timing of the rebate disbursement, he noted, "is perfectly placed in terms of when the customer needs to shop for her children. We have a nice mix to be able to appeal to mom, in terms of our assortments, as well as to the junior or the young man."

On analysts' broader economic questions, Ullman said the retailer is "well positioned to achieve our five-year objectives" via a recently imposed "bridge plan" implemented during this "pause."

For example, JCP has announced it will open fewer new stores than the previously slated 50 annually. This year there are 36 new units scheduled "and we'll take another look at next year as we get further into this year."

Similarly, JCP has reduced its remodel plans to 20 for this year, down from the 65 units that were revamped last year.

Throughout, its merchandise mix will "remain focused" on JCP's two major exclusive concepts – American Living and Sephora – as well as its many "power brands." Ullman plans on "accelerating some aspects" of the business plan, such as investment in talent and development of e-commerce.