In a shocking new report from Citigroup research (ok I am being sarcastic), analysts note that a recent visit to J.C. Penney Company, Inc. (NYSE:JCP) they saw few customers. Specifically, ‘traffic in the department was very light during our visit, and we did not see many customers making purchases’, (nor did they see staff). However, they did note seeing ‘several male fashionistas shopping the assortment with overflowing shopping baskets/carts’ ‘hot trends in vintage neutrals, camo green, skinny jeans with blue washes, and bottoms with a curvy fit’, and expect the store to make money selling fat people clothing. J.C. Penney Company, Inc. (NYSE:JCP) has (not yet) blamed the poor results on weather, nor did citi mention that possible
excuse reason in the report. Additionally, we have no word yet on projected EBITDARP for FY 2030, but Citi did provide some pictures of stores which look like ghost towns. See below for the full report.
The following is our rough coverage of the 2021 Sohn Investment Conference, which is being held virtually and features Brad Gerstner, Bill Gurley, Octahedron's Ram Parameswaran, Glenernie's Andrew Nunneley, and Lux's Josh Wolfe. Q1 2021 hedge fund letters, conferences and more Keep checking back as we will be updating this post as the conference goes Read More
We had the unique opportunity to tour the Manhattan Mall J.C. Penney Company, Inc. (NYSE:JCP) store with global fashion industry experts.
J.C. Penney Company, Inc. (NYSE:JCP) has made noticeable progress in improving its assortment in men’s, women’s, and juniors. We saw a broader assortment of private label product, more sizes on the floor, competitive pricing, and the store did not feel overly promotional. Traffic was busiest in men’s, but light in women’s and home when we toured the store. We are upbeat on the progress made in apparel with pricing and assortment, but our view is tempered by the lack of traffic in the relaunched home dept.
Bringing Back Private Label — JCP has elevated the fashion and improved the price/value equation of its heritage private brands such as Arizona and Decree. In these brands, JCP is moving to an 8-week program, vs. 16 weeks previously, to provide more newness to the selling floor. In women’s, JCP is focused on reviving brands like a.n.a, St. John’s Bay, and Worthington that had lost their identities under the prior management team. The company is still very early in this process.
Evolution of Men’s — JCP has experienced robust traffic in men’s, driven by new contemporary labels like William Rast and the Tourist by Berkman Brothers, updated basics from St. John’s Bay, and a broad selection of denim in the Levi’s shop. JCP is moving back to more traditional fits after moving to a silhouette that was too slim last year. Actionwear (such as the Vans brand) and big & tall (such as the Foundry) were highlighted as areas of growth. We even saw several male fashionistas shopping the assortment with overflowing shopping baskets/carts.
Juniors Back-to-School Preview — JCP brought in transitional product for the early Back-to-School shopper. In Arizona, we saw hot trends in vintage neutrals, camo green, skinny jeans with blue washes, and bottoms with a curvy fit. J.C. Penney Company, Inc. (NYSE:JCP) is also revamping tops, led by inspirational screen tees from Olsenboye. Pleather and camouflage prints should also be big trends for Back-to-School.
The Lights Are On But No One’s at Home — We have been underwhelmed by the customer response to J.C. Penney Company, Inc. (NYSE:JCP)’s new home department. Traffic in the department was very light during our visit, and we did not see many customers making purchases. J.C. Penney Company, Inc. (NYSE:JCP) recently underwent the largest home relaunch in company history, featuring new products from Michael Graves Design, Martha Home, BODUM and Happy Chic by Jonathan Adler. While we were impressed with the product quality and assortment in home, we question whether JCP’s core customer is willing to pay significantly higher price points for these products. A Happy Chic round pillow sold for $120 and a BODUM coffee maker sold for $250, which we believe is higher than the J.C. Penney Company, Inc. (NYSE:JCP) customer is willing to pay. We also found it interesting that the service desk was not staffed at 11:00am and that a test kitchen previously used for live demonstrations now displays merchandise.
New Era of High-Low Pricing — We saw a return to high-low promotional pricing, but it was noticeably less than in the past. We also saw more single price point signage than in the past, such as $7.99 for Decree tops. We believe that more signs with % off would be welcomed by this customer as a means to show value. Overall, we believe that pricing was competitive and rational. We did not see a very high penetration of clearance product.