A century-old name in retailing, J. C. Penney is reinventing itself to modernize its iconic but sagging department store business. The company's chain of some 1,100 JCPenney department stores in the US and Puerto Rico has found itself squeezed between more upscale competitors (Macy's) and major discounters (Kohls, Target, Wal-Mart). There are 300-plus Sephora shops inside JCPenney locations, and specialty menswear is available at Foundry Big & Tall Supply stores. Once one of the nation's top catalog operators, Penney has exited the catalog business and is expanding its e-commerce presence. J. C. Penney Corp. is a subsidiary of holding company J. C. Penney Company (created in 2002), which is publicly traded.
Beyond its full-line department store and e-commerce (jcp.com) businesses, Penney's new Growth Brands Division in 2011 launched its big-and-tall men's store concept, The Foundry Big & Tall Supply Co., with 10 stores in Texas and Missouri, and corresponding website. The new men's chain expects to open 300 stores by 2016. Also in 2011 the company shutdown its legacy catalog and catalog outlet stores business resulting in a loss of $543 million.
With stores in 49 states and Puerto Rico, J. C. Penney rings up 100% of its sales in the US.
J. C. Penney's sales fell nearly 3% in fiscal 2012 (ends January) vs. the prior year and the company was unprofitable. With the exception of fiscal 2011, when its sales inched up by just 1%, the department stores operator's sales have declined in four of the last five years. The company blamed the drop off in 2012 sales on its exit from the catalog and catalog outlet businesses. (Same-store sales were essentially flat.) Penney's store count also dipped slightly (from 1,106 stores to 1,102) in fiscal 2012 vs. 2011.
In a bold move the company hopes will reverse its decline, Penney hired the architect behind Apple's wildly successful retail stores and 15-year Target veteran, Ron Johnson, in late 2011. Johnson's vision for restoring the 110-year-old company to retail relevancy includes a new logo, spokesperson (Ellen DeGeneres), the simplification of the pricing strategy, redesign of its department stores with a "town square" area of services (including free haircuts for kids) and small shops around the perimeter, and reducing the number of times prices are marked down. Indeed, Johnson plans to transform the department store into a collection of some 100 branded shops and gathering areas. To date, the transformation (launched in early 2012) hasn't been easy or particularly successful, as the company's sales fell more than 20% in the first and second quarters of fiscal 2013. (The changes at Penney has also involved jobs cuts, including nearly 1,000 employees at its headquarters, and the closing of one of its three call centers.) Indeed, transforming Penney's 1,100 department stores nationwide will take considerable effort and time, but Johnson is confident of long-term success. The new layout will affect about 700 of the company's larger stores, with details on the rest to be determined. So far Johnson has the support Penney's largest shareholder and board member, the activist investor William Ackman.
Ackman, through his hedge fund Pershing Square Capital Management owns about 18% of Penney's shares, while Vornado Realty Trust holds nearly 11%. – less