--J.C. Penney sees itself eventually opening more stores in
large areas
--Company will return to using the word 'sale'
--Martha Stewart has created 3,000 items for Penney to sell,
Penney CEO says
(Adds additional commentary by Penney chief executive from
presentation he gave investors Tuesday)
By Karen Talley
J.C. Penney Co. (JCP) sees itself ultimately adding more stores
in bigger metropolitan areas to become more competitive with rivals
Macy's Inc. (M) and Kohl's Corp. (KSS), which already are
well-stored in these parts of the U.S.
Penney would like to "add more stores in big" areas, Chief
Executive Ron Johnson said at an industry conference. "When we get
content correct, we think we can become a growth vehicle."
Mr. Johnson sees more sophisticated merchandise serving these
regions and said the company, because its is largely no longer
promotions oriented, can attract key merchandise.
Mr. Johnson acknowledged Penney still has a long way to go to
get existing operations humming.
"We like where we are headed," he said. But "we haven't
communicated the pricing change in a way customers understand
yet."
To that end, Penney is going from using the phrasing month-long
"values," which confused customers, to month-long "sales," Johnson
said.
"What we intend to do is a sale; we run 12 a year," Johnson
said. "That's a messaging change within our vision for how we want
to compete."
Johnson also said that Martha Stewart Living Omnimedia Inc.
(MSO) has already created 3,000 items for the retailer to sell in
one of its planned stores within a store. The arrangement with
Penney is somewhat controversial: Macy's claims to have exclusive
selling rights to this type of Martha Stewart product, but Penney
struck a deal that is set to begin in Febuary. Macy's has taken
Martha Stewart Living to court over the arrangement.
J.C. Penney has gone from being extremely promotional under its
former executives to a three-pronged approach under Mr. Johnson,
the former retail chief at Apple Inc. (AAPL) who joined Penney in
November.
The three-level plan does away with scores of sales events in
favor of more-stable pricing. The approach involves everyday
prices, sales that last a month, and certain merchandise marked for
clearance the first and third Friday of each month and kept at
promotional levels until sold.
But in the first quarter that Mr. Johnson's strategy was in
place, Penney generated a huge loss, raising questions about
whether the transformation will work. For the quarter ended April
28, Penney reported a loss of $163 million, or 75 cents a share,
compared with a year-earlier profit of $64 million, or 28 cents a
share. Total sales declined 20% to $3.15 billion.
J.C Penney was recently down 3.6% at $24.35.
Write to Karen Talley at karen.talley@dowjones.com