Many of J.C. Penney’s web customers pick up orders in stores

August 19, 2015 12:34 PM

J.C. Penney Inc.’s second quarter sales increased, but the big news is the retail chain’s new “omnichannel” strategy is working, CEO Marvin Ellison told analysts on the company’s earnings call with analysts last week.

Ellison didn’t mince words about the company being slow to develop a strategy to serve customers both online and in stores. While Penney is “admittedly behind the retail industry in our omnichannel strategy, I remain very satisfied with the progress we're making. In the second quarter sales growth through accelerated sequentially from the first quarter,” Ellison said, according to a transcript from Seeking Alpha.

Ellison did not quantify online sales growth for the quarter, but he did tell analysts “we’re very excited to see several aspects for our omnichannel capabilities improving,” including web customers taking advantage of the capability to buy online and ship to any store they choose, which Penney rolled out in Q1. “This results in more physical trips to our brick-and-mortar locations with add-on purchases,” he said.

Penney, No. 37 in the Internet Retailer 2015 Top 500 Guide, also took advantage of store inventory in the second quarter to fulfill online orders. “For a retailer with over 1,000 brick-and-mortar locations, leveraging enterprise inventory provides us with a great opportunity for stores to act as fulfillment centers,” Ellison said. So far 250 Penney stores are shipping online orders.

Ellison is hotly pursuing the retailer’s stated goal of unifying stores and the web. In October Penney announced Ellison would succeed CEO Myron E. “Mike” Ullman. Ellison officially joined Penney on Nov. 1 as president and CEO-designee but did not move into the CEO role until this month.

Penney’s announcement follows a report from Kohl’s Corp. that it completed a buy online and pick up in store program in the second quarter ended Aug. 1. Kohl’s, No. 22 in the Top 500, finished rolling out the program in Q2 to all of the chain’s 1,164 stores in 49 states. After a quiet pilot phase Kohl’s has big plans to make the program a companywide strategic initiative, CEO Kevin Mansell told analysts on the company’s quarterly earnings call Thursday.

Penney will try going Kohl’s one better by piloting same-day buy online, pick up in store in several key markets later this year, with a companywide rollout slated for early 2016, Ellison said.

Penney does not break out quarterly e-commerce sales but for the second quarter of fiscal 2015 ended Aug. 1 reported:

  • Total sales were $2.875 billion, up 2.7% from $2.799 billion in the same quarter of fiscal 2014.
  • Comparable-store sales increased 4.1%.
  • Net loss of $138 million, compared with a net loss of $172 million in the same period last year.

For the first six months Penney reported:

  • Total sales were $5.732 billion, a 2.4% increase from $5.600 billion in the first half of 2014.
  • Comparable-store sales increased 3.7%.
  • Net loss of $305 million, compared with a net loss of $524 million in the first six months of fiscal 2014.



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