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Private Brands to Drive 70% of J.C. Penney Sales by 2019

J.C. Penney Boutique+

J.C. Penney (JCP) plans to chuck labels that are no longer relevant and expand popular brands’ offerings as it seeks to set itself apart from the pack.

The Plano, Texas-based department store retailer outlined a three-year plan for profitable growth and improved performance at its 2016 analyst meeting Wednesday.

“Since becoming CEO a year ago, the team and I have made considerable progress balancing the art and science of retail by improving our execution in omnichannel, marketing, store operations, supply chain and merchandising,” said Marvin Ellison, chairman and chief executive officer. “There is still much work to do, but I am confident that our focus on sales growth, new technology and expense management will continue to accelerate our turnaround and create shareholder value.”

Part of this strategy includes pushing private and exclusive brand penetration up to 70 percent of total merchandise sales by 2019. To reach that target, J.C. Penney intends to cut underperforming labels while adding more products and categories to currently popular ones.

The retailer will also grow its “special sizes” offering by leveraging in-house design and trends teams to deliver plus size, petite and “big and tall” clothing that meets the lifestyle needs of various ages and body types. Home and beauty will also receive a revamp.

Read: Retailers Turn to In-House Brands to Woo Price-Conscious Consumers

In addition to improving its apparel offering, J.C. Penney will enhance the omnichannel experience in order to connect with customers how, when and where they prefer to shop. As part of this approach, a redesigned mobile app will allow people to locate items, apply coupons and access their rewards more easily.

J.C. Penney also wants more than 50 percent of online orders to stem from or lead to an in-store experience. To that end, shoppers can ship an online order to any of the retailer’s 1,000 stores nationwide, with more than 150,000 items on eligible for same-day pickup within four hours of making a purchase.

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For those consumers that prefer the convenience of home delivery, J.C. Penney will offer a standard turnaround of two business days or less to more than 95 percent of the U.S. population. Plus, in a bid to minimize markdowns and improve customer service, the retailer can fill online orders with inventory from 250 stores, in addition to its three direct logistic facilities.

If all goes according to plan, J.C. Penney expects to achieve compounded comparable sales growth of 3 percent a year and anticipates profits to be between $450 million and $500 million by 2019. That’s about $1.40 to $1.55 earnings per share.

Ellison added, “Although we’ve sharpened our priorities for the next three years, our strategic framework remains the same. The entire team—from stores to supply chain to the home office—is squarely focused on delivering an unparalleled omnichannel experience, powerful private brands and increased revenue per customer. Under this framework, we are taking market share, outpacing competitors and improving the long term profitability of our business.”

Last week, J.C. Penney said same-store sales increased 2.2% in the second quarter, helping net sales rise 1.5% to $2.92 billion and narrowing its net loss to $56 million. Though its stock fell 2.42% in early trading Thursday to $10.48, it’s up 57.51% year-to-date.