JCP: Not Your Mother’s Store Anymore

Apr 21, 2004
George Anderson

By George Anderson

J.C. Penney’s chairman and chief executive officer, Alan Questrom wants everyone to know, “We’re no longer my mother’s store. This is a new store.”

A sense of optimism surrounds the department store retailer following recent reports showing stronger than expected sales in the company’s stores, Web site and catalog business.

The retailer has also been buoyed by the sale of the Eckerd drug store chain. It plans to take the proceeds of the sale and put it against paying down debt and repurchasing company
stock. The company is looking to improve its investment grade and reduce borrowing costs.

In another move the company hopes will change consumers’ perceptions about its stores, Penney will introduce a new line of home furnishings next month from the interior designer
Chris Madden.

Ms. Madden, who is being hailed by some as the next Martha Stewart according to the Associated Press, will bring a new sense of style to Penney’s home décor department.

Linda Kristiansen, an analyst with UBS said, “It’s going to be more contemporary. Their home store is a little dated right now.”

According to the AP report, “Penney plans to promote Madden’s line with a TV campaign, magazine inserts, 50 million pieces of direct mail and a temporary showroom in New York’s
Rockefeller Center. Company officials predict Madden will help lift sales of Penney’s home-furnishings lines from $1.5 billion to $2 billion by 2006.”

Moderator’s Comment: Is J.C. Penney still your mother’s department store? What do you expect to see the chain do now
that it has sold Eckerd?

What’s happening in Penney’s home décor business may be a precursor to some other changes we’ll see made across the store. The chain says the Madden
line of products is slightly more upscale than what it has been carrying. To make room for the new line, Penney will delist some of its lower end products in the category.

Anderson – Moderator

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