JCP expects no lift in second-half sales

Johnson: Greed is bad

HTT Staff -- Home Textiles Today, 9/20/2012 11:31:28 AM

Plano, Texas - When JCPenney outlined its transformation last February, executives forecast a hit to sales in the first half of the fiscal year and improving results in the second half. Yesterday, ceo Ron Johnson told analysts the second half performance is likely to mirror the first.
He also pointed to early comp gains at the 12 shop-in-shop concepts JCPenney has rolled out since Aug. 1 as a sign of the potential for improved sales down the road.
"We're seven weeks into some. We're three weeks into others," Johnson said during an analyst day at headquarters, which included a walk-through of a prototype mock-up in progress. "They are comping 20% better than the rest of the store."
The Izod brand, which moved into its own shop Sept. 1, is up 50% compared to a year ago and performing above expectations, he added. The new JCP branded basic apparel shop in women's is "off the charts" while the men's version has been slower to gain traction.
"The shops are working," said Johnson. "We will have 40 of them a year from now."
Ultimately, Penney will have 100 shop-in-shops, some of them rotating through seasonally. Johnson said each deal with vendors for the branded shops is negotiated separately. Vendors provide capital to build the shops, but share in the profits, he said.
"There is no ‘funny money,'" he added, noting JCP is not asking for promotional allowances or markdown money from its shop vendors.
"Greed is a really bad thing," he said. "We can't say ‘We're the power' and take money out of their pockets. If you're going to be profitable long-term, we have to share in profitability. It's a principal thing."
Safeguarding vendors' brand integrity is key to attracting the kind of merchandise JCPenney wants to offer, he added.
During the presentation, Johnson also said JCP is developing a new registry program called Present Company and working to overhaul its ecommerce business. Details are to be announced at a later date.