Since 2012 JCPenney has been on retail's 'Do or Die' list, but so far JCP has set its sights on 2014 as its turnaround year. After shifting its focus to rebuild from the inside out, reorganizing the management team, and revamping marketing and merchandising strategies, the retailer is making significant headwinds. Despite the difficult fourth quarter that faced many retailers, JCPenney delivered on its promise to generate positive comparable store sales with 2% increase, as well as 26.3% growth on jcp.com. "Today, the most challenging and expensive parts of the turnaround are behind us and the work we did in 2013 has laid a foundation for continued progress in 2014," said JCP CEO Mike Ullman.
Online sales through jcp.com continued to show significant improvement this quarter, contributing $381 million in sales. Similar to overall performance, the online sales trend improved sequentially over the third quarter and the month of January was up almost 45% to last year.
This was accomplished through improved merchandise assortments, restored inventory levels and an enhanced online experience. Merchandising and marketing teams for dotcom have been realigned to support the retailer's omnichannel approach to business. "We still have more work to do but we are pleased with how quickly the business came around with just these few strategic adjustments," said Ullman. "We also built a marketing strategy for the back half of 2013 that focused on traffic and driving promotions, in-store visuals to support the marketing events and delivered a successful marketing strategy during holiday."
As part of the ongoing examination of store performance, JCP announced it will be closing 33 underperforming stores. The stores will be closed by the beginning of May of this year. This year, the retailer is also remerchandising many aspects of the store, including home and women's apparel to enhance the shopping experience and increase purchase conversion.
There is a renewed focus on customer research and segmentation of omnichannel strategy, which is focused on creating seamless customer experiences between JCPenney stores and jcp.com. "Customer experience from marketing, to browsing to check-out has to be seamless across channels and that's what we are working toward," continued Ullman. "As a pioneer in online retail, we believe JCPenney can and will help lead the way in the development of true omnichannel experience."
"We are heading into the final phase of our turnaround," noted Ullman. "We know that work must be done and we have a plan in place to position the company for a long-term profitable growth. During this go-forward phase, we are laser-focused on refining our merchandising and marketing strategies in order improve our gross margins and steadily grow sales while continuing to tightly manage expenses and leverage our expense base."
"We anticipate completing the turnaround in 2014. I think it is too early to be very, very specific, but I think the liquidity guidance we gave you gives you the comfort that we are not burning cash in the process of finishing the turnaround," said Ken Hannah, EVP and CFO for JCPenney.
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