Chief vows sales gain is job 'number one'

PLANO, TX — The improvement of sales from JCPenney's catalog division, which includes its Internet business, is "our number one priority" for 2003, said Vanessa Castagna, executive vp, after the division declined 20.7 percent for the fourth quarter.

Speaking during its quarterly conference call last week, Castagna added that the decreased sales were due to lower circulation and page counts, fewer outlet stores and changes to customer payment terms, though she said that "we see some stabilization." Already it has lowered the average selling price in the catalog to better fit the customers' expectations.

At the department stores, home was a strong area for the fourth quarter, Castagna said, and was up in the single digits for the second year in a row, led by the expanded housewares section, window coverings, bedding and bath. "We will continue our efforts to expand dominance in the soft home businesses," she said.

The JCPenney Home brand, its largest private label program, has also made a lot of strides in holiday and spring, she said, as it focused on colors and how merchandise is packaged, making it easier to shop. "Private brands are very important and special to us, it's been our heritage for a long time." Castagna also mentioned the recent Good Housekeeping favorable write-up of its towels, and overall proprietary products have more of a focus on value and fashion.

The Internet business also did very well, increasing 20 percent for both the quarter and the year, with $381 million in sales last year, and $450 million expected for this one. "We believe that this will be a billion-dollar business in the next five years," she said.

The catalog and Internet division, however, is expected to decline 5 percent to 10 percent, due in part to fewer outlet stores, with a high single decline in the first half of the year, and with a modest gain in the back half.

The in-store environment also continues to improve, she said, with better graphics and visual merchandising. The retailer completed its chain-wide conversion to centralized checkouts last October, and with favorable results. And in distribution, 10 out of 13 facilities are now up and running, with the others to come online in the first half.

The company is also "comfortable" with its inventory levels and balances, she said, and the assortment is more trend-right, with better in-stocks for spring, and less fall and holiday clearance items. Store levels are higher, she added, but focus on key categories, where it earlier was deficient. And stores were set for spring in mid-February, two weeks earlier than last year, to enhance the seasonal transition.

The retailer has also improved how it feeds its smaller stores merchandise, she said, and now the total infrastructure is more balanced, and can react to sales trends at the smaller stores better.

Executives also said that the retailer will spend north of $600 million in advertising for the department stores last year.