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J.C. Penney’s web and omnichannel initiatives contribute to Q4 sales gains

February 29, 2016 09:26 AM
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After several volatile years, J.C. Penney Co. Inc. appears to be standing on more solid ground. The department store retailer says comparable-store sales grew 4.1% in Q4 and 4.5% for the fiscal year ended Jan. 30. In a call with investors today, CEO Marvin R. Ellison emphasized the company’s regained share was “not accidental or happenstance.”

While it stopped reporting online sales last year, Ellison today said sales on JCP.com had hit a new high in the fourth quarter of the 2015 fiscal year. In Q4 2014 JCP.com sales were $428 million; in Q4 2013, they were $381 million.

He also highlighted how the retailer is quickly remodeling its systems and adding data analytics to help it further improve omnichannel services, such as buy online, pickup in store and mobile commerce. “We are quickly closing the technology gap,” he said.

J.C. Penney began rolling out its buy online, pickup in store the same day service in some stores last year. Ellison said it will be available in all stores before the back-to-school sales season. He said consumers who have picked up their JCP.com orders in a store have a 35% attachment rate, meaning they buy another item in the store on their visit.

“We are repairing a broken online business, and in the second half of 2015 we developed true omnichannel capabilities,” Ellison said. “The development will allow us to share inventory from bricks and mortar and store locations with our dot-com area and have seamless connections with our customers, how and when and where she wants to shop. These new capabilities allowed us to deliver record holiday online sales in the fourth quarter and we'll continue to have plenty of upside to grow.”

The retailer is also investing in mobile commerce and data analytics that will help it localize product assortments and pricing. In Q4, web traffic from mobile devices was up 25% and mobile conversion improved 60%. The retailer also began testing the sale of appliances in some stores in Q4. That idea, Ellison said, came from site search data from JCP.com. The company looked at what consumers searched for and couldn’t find on the site. Appliances were a popular, unmet search term.

For the fourth quarter ending Jan. 30, J.C. Penney reported:

  • Net sales of $4.0 billion, up 2.8% from $3.89 billion a year earlier.
  • A net loss of $131 million, up from a loss of $35 million a year earlier.

For the fiscal year ending Jan. 30, it reported:

  • Net sales of $12.63 billion, up 3.0% from $12.26 billion.
  • A net loss of $513 million, down from $717 million.

Also this week, the retailer announced a new marketing message meant to drive home its value proposition to its targeted customer demographic, households earning about $60,000 a year. The “Get Your Penney’s Worth” tagline will appear in 30-second advertisements airing in English and Spanish (“Donde Tus Penney’s Valen”) starting next week, and in print and digital marketing. The retailer will also launch “Penney Days” where select items from the retailer’s private label product lines will be sold for a penney, or as part of a buy one, get one for a penney promotion. Ellison, in the call with analysts, pointed to the company’s private brands as a strategic priority in the company’s growth plan. He noted a young adult apparel line J.C. Penney began testing online and in 50 stores in September will be rolled out to 500 stores soon. The brand, Belle + Sky, is meant to provide faster access for Millennial-age shoppers to runway looks.

J.C. Penney is No. 37 in the 2015 Internet Retailer Top 500 Guide.
 

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