J C Penney Company is planning to revive its print catalog after a five-year hiatus. The department store chain operator will be distributing a new 120-page catalog to select customers early in March, according to a report from the Wall Street Journal.
Analysts at Sterne Agee believed that the decision of J C Penney Company to bring back is catalog is a modest positive for same-store sales.
J C Penney catalogs still very relevant
Sterne Agee analyst Charles Grom and his colleagues noted that J C Penney decided to restore the catalog due to recent studies showing that a significant portion of its online sales before came from catalog shoppers.
J C Penney generated approximately $450 million sales from pure catalog shoppers in late 2010. The company stopped sending out catalogs in 2011. According to Grom and his fellow analysts, the company did not consider” browse in catalog, buy online” purchasing behavior, which implies a much greater impact at the time.
The analysts emphasized that “catalogs are still very relevant” and they perceived J C Penney’s decision as an “opportunity to recapture at least a portion of the half-billion dollar sales lost when it discontinued the catalogs several years ago.”
JC Penney catalog to focus on Home category
Grom and his fellow analysts learned that J C Penney will not re-introduce its “big book catalogs (more than 1,000 pages). The company plans to send out around 100- 150 pages catalog that focuses on the Home category.
According to them, J C Penney will likely send the new catalog to around 1-3 million customers. Grom and his team added that starting this spring, the department store chain operator is planning to create 2-3 catalogs along with additional Home focused direct mailers to complement the larger catalogs.
The analysts noted that J C Penney’s catalog business generated several billion dollars in sales at its peak, representing as much as 15% of its total revenue in 2001.
J C Penney stopped reporting its catalog sales separately in 2007, but the analyst pointed out that it was still a $454 million business for the company in 2010. When the company discontinued catalogs, the result was a ~300 basis point drag on sales.
“To this end, while the lines continue to blur across channels, we believe reintroducing catalogs could be an intelligent way for Penney’s to capture lost sales as it works towards capturing the $750 million and $900 million respective e-commerce and Home sales opportunities…,” according to Grom and his colleagues.
