What’s Going On Inside J.C. Penney?
By George Anderson
There’s a lot going on inside J.C. Penney these days and much of it behind closed doors.
The retailer has confirmed plans to close 12 of its U.S. department stores by the end of the year. This move follows last week’s announced closing of Penney’s sale of its six department stores in Mexico to Grupo Sanborns S.A. de C.V. of Mexico City.
The location of the stores slated to close has yet to be announced.
A spokesperson for the retailer, Quinton Crenshaw, told the Associated Press, “We evaluate our store base on a year-to-year basis … and a lot of the stores aren’t meeting the profitability. That’s why they have to close.”
Penney released its earnings for November (not including the Black Friday weekend) and comparable store sales at its department store unit were off 0.8 percent.
The company’s online and catalog sales continued to grow with an increase of 11.7 percent for the combined operations. Internet sales alone were up 45 percent compared to the same period last year.
Penney attributes the improvement in its catalog and Internet sales to an improvement in “merchandise assortments, presentation and value.”
Eckerd, Penney’s drugstore unit, saw sales grow 0.7 percent for November. Penney issued a release last Friday that it was continuing to explore alternatives including “retention, merger, spin-off or sale” of the drugstore chain. The company said it is in the early stages of this process and that a number of parties had expressed interest in a deal for Eckerd.
Penney expects to see comps for its department stores and catalog/Internet business to be up in the low single digits for December. Same-store sales at Eckerd are expected to show some fall-off.
Moderator’s Comment: What do you see as the plusses and minuses of Penney’s business? What should the company do moving forward?
At this time of year, prayer always comes to mind as one means of dealing with life and business problems.
Penney has little option but to rid itself of unprofitable business, whether that be through closing stores or selling off whole divisions, such as Eckerd.
The prevailing wisdom is that Penney will be able to concentrate on its core business once this happens. Still, we have yet to see anything to suggest Allen Questrom and Company
have a clear vision for what will make the future J.C. Penney any different or successful than the present operation. [George
Anderson – Moderator]