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J.C. Penney and Joe Fresh Call It Quits

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J.C. Penney and Joe Fresh are parting ways.

The department store chain and the Canadian fast-fashion retailer have decided not to renew their existing distribution agreement that expires on Jan. 30, 2016, and to instead focus on their respective growth strategies.

Joe Fresh President Mario Grauso said the company will concentrate on its free-standing stores and e-commerce, strengthening its 340-plus outlets in Canada and opening 140 locations in 23 countries within four years.

As part of an agreement between J.C. Penney’s then-CEO Ron Johnson and Joe Fresh founder Joe Mimran (Johnson was fired in April 2013; Mimran stepped down in March), Penney’s started selling the on-trend line through more than 650 branded shop-in-shops and online in March 2013 in a bid to boost the retailer’s revenues and fashion quotient by attracting much-needed new shoppers. After failing to meet the mark, the mini-shops were downsized to 200 doors less than a year later, and Joe Fresh Kids was liquidated.

“The paring down was proof that it wasn’t a brand for their core customers and exiting it completely solidifies that,” said Poonam Goyal, senior retail analyst at Bloomberg Intelligence.

“We appreciate the collaboration that J.C. Penney has shared with Joe Fresh over the last two years, and the opportunity to introduce the brand to more American consumers both online at jcpenney.com and in our larger stores across the country,” shared Liz Sweney, executive vice president and chief merchant for J.C. Penney. “We wish their company continued success as they expand into other markets.”

Meanwhile, the company’s current CEO, Mike Ullman, has made it clear that private label brands will be front and center in its growth strategy. “We did a good job in 2014 of reconnecting and re-engaging with tens of millions of J.C. Penney customers,” Ullman said in a Q4 earnings call, according to a transcript of the discussion. “This will be fueled by growth in our powerful private brands, like Worthington, St. John’s Bay, Liz Claiborne and J. Ferrar.”

A trendy Joe Fresh moto jacket, normally priced at $69, was cut to $44.85 online on Thursday morning, while a pair of ripped boyfriend jeans was down from $59 to $43.99. Goyal noted that Penney’s shoppers aren’t “stylistas” and that even those reduced prices are higher than what they would typically expect to pay. She added, “It comes down to price and style, and I think for both it was out of reach for their customer.”

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