Is the J.C. Penney turnaround for real?
The J.C. Penney rebound continues. The department store chain posted a same-store sales increase of six percent in the second quarter. The company that many had left for dead following Ron Johnson’s stint as CEO, still has some fight in it, now having posting sales increases for three consecutive quarters.
"Our turnaround initiatives continue to produce improved financial results. In the second quarter, we gained additional market share while significantly increasing gross margin in a highly competitive promotional environment," said Mike Ullman, Penney’s CEO who returned to the company to replace Mr. Johnson in April of last year.
"With our unique assortment of powerful private brands, key national brands and exclusive attractions — all at prices customers can afford — we expect to continue driving profitable sales this back to school season," Mr. Ullman added in his statement. "As we approach the completion of our turnaround, we are focused on reestablishing JCPenney as the premier shopping destination for the moderate consumer."
While its same-store numbers appear impressive, it is important to note that Penney is going up against some historically weak comps resulting from many of the missteps that took place under Mr. Johnson.
However, it’s clear that the mood at the department store chain is more optimistic than in the past. A concrete sign of that optimism is the company’s decision to open a 124,000-square-foot store in Brooklyn, NY.
In a press release to announce the opening, Mr. Ullman said, "This location displays our commitment to mindful store growth in high potential markets, and will perfectly complement our other New York City locations in Manhattan, the Bronx, Queens and Staten Island."
Not everyone is convinced the chain should open new locations, even if they are set in a densely populated area and use 45 percent less energy than the typical Penney store.
Craig Sterling, an analyst at EVA Dimensions, told Bloomberg News, that Penney needs to close more stores than planned (33 are slated for closing) and should not be opening new ones.
"Their store closings aren’t happening fast enough," he told Bloomberg. "J.C. Penney is the last company that should be spending money on growth."
- JCPenney Reporsts Fiscal 2014 Second Quarter Results – J.C. Penney Company, Inc.
- JCPenney To Open First-Ever Store In Brooklyn – J.C. Penney Company, Inc.
- J.C. Penney comes to Brooklyn this month – Bloomberg News/Crain’s New York Business
Are you a believer in the J.C. Penney turnaround? How do you feel about the new store expansion in Brooklyn? What must the chain do to build on the sales improvements made in the last three quarters?