JCPenney has tried so many turnarounds during this decade, it’s difficult to remember which direction the classic American department store brand is even supposed to be facing. As of now, it’s not headed in the direction of profitability, or paying down its debts.
The news is bad, but not all bad
Sales at comparable stores, an important figure when a retailer is on a store-closing spree as JCPenney has been, are down this quarter again. At the halfway mark for 2017, the company has a net loss of $242 million, since liquidating stores means a cash infusion, but much lower margins and profits.
Like anyone having a rough decade or two, the company has had to borrow a lot: It has close to $4 billion of long-term debt, and continuing to lose money won’t help it pay that debt down. Investors see this as a really bad sign, and the company’s stock has reached an all-time low.
Store closing sales brought some shoppers back to visit, and JCPenney even pushed back the final closing dates for some locations because there were shoppers showing up for once.
Net sales across the whole chain are up, but store-closing sales and higher costs for merchandise meant that the retailer still wasn’t profitable during this period.
Look, they’re trying
The retailer has announced a lot of initiatives meant to find new markets and boost profits this year, which include:
• Adding mini-stores for toys, which will be conveniently close to the existing Disney mini-stores.
• Putting Nike mini-stores inside 600 locations.
• Expanding the number of stores that sell appliances, and adding more brands to its assortment.
• Opening or expanding more than 100 Sephora mini-stores.
• Selling linens to hotels, hiring an outside sales staff to be competitive with existing vendors in that business.
• Revamping its rewards program, hoping to bring the customers that it has back more often.
Awaiting a Christmas miracle
Based on the company’s strengths so far this year, the back-to-school and holiday season may improve the chain’s fortunes in the second half of the year.
In general, people are still coming to JCPenney, but they aren’t as interested in buying clothes there. Clothes for kids and plus-size women are exceptions and doing quite well, but overall the company is trying to rely less on apparel, and take advantage of the slow-motion demise of competitor Sears instead.
“While broader retail remains challenged, we are encouraged by the improved performance in our total apparel business, including a significant acceleration in kids’ apparel,” CEO Marvin Ellison said in a statement.
The new toy mini-stores may also help heading into the holiday season, if they’re able to either offer something unique or compete effectively with Walmart and Toys ‘R’ Us.
by Laura Northrup via Consumerist
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