J.C. Penney Says Toughest Part of Turnaround Complete
J.C. Penney declared its holiday marketing strategy a success and said it has completed the toughest part of its turnaround.
The beleaguered retailer posted its first quarterly profit in more than two years along with a gain in same-store sales. It benefited from a return to its traditional discounting strategy and the revival of popular private-label brands.
"The most challenging parts of the turnaround are behind us," CEO Myron Ullman said during a call with analysts, adding that J.C. Penney is heading into the final phase of its turnaround. The first two phases included stabilizing the brand and rebuilding, he said, calling it important to "restore calm and clarity of purpose." The third phase involves refining merchandising and marketing strategies in order to improve gross margins and sales.
"It is, of course, critical that we fight for and win customer attention -- that marketing and communication cut through the noise and leave an enduring impression that J.C. Penney will meet customer needs and wants by fitting her size, her wallet and her lifestyle," Mr. Ullman said. "We know it will take time to completely restore that association, but we are making great strides."
J.C. Penney will seek to push that agenda forward during the Academy Awards with six spots focused on fit and featuring the brand's new tagline, "When it fits, you feel it."
"We had recently lost track of who we are and the wishes of the customers we serve. As we focus on reconnecting with our core customer, our new marketing marketing will remain true to our values and those of the customers that we serve," a J.C. Penney spokeswoman said of the Academy Awards push. "Through our new marketing we are bringing decades of relevance into a present proposition that matters, highlighting what have always been good at -- fitting the diversity of America's shapes, color and wallets."
J.C. Penney's same-store sales for the quarter ending Feb. 1 rose 2%, the first gain since the quarter that ended April 30, 2011. For the full year, same-store sales decreased 7.4%. Total sales decreased 8.7 % for the year.
"Posting positive sales is a step in the right direction," said John Tomlinson, an analyst at ITG Investment Research. But the company still faces "broad challenges," he said.
Net income was $35 million in the quarter that ended Feb. 1, compared with a loss of $552 million a year earlier, the Plano, Texas-based company said. The company's last quarterly profit was in the quarter ended July 2011. Revenue fell 2.6% to $3.78 billion.