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JCPenney Dwells on Merchandising Strategy at Oppenheimer Conference

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Merchandising strategy

JCPenney (JCP) highlighted its merchandising strategy at the 15th Oppenheimer Consumer Conference held on June 23. JCPenney’s president and CEO designee, Marvin Ellison, highlighted the company’s focus on certain merchandise categories like home, footwear, and accessories such as bags. At the consumer conference, Ellison discussed how some of the product categories like home and kids were impacted by strategic mistakes made under a former CEO and how it’s taking more than the anticipated time to revive them.

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Home merchandise

Home merchandise is a key aspect of JCPenney’s merchandising strategy. In fiscal 2014, ending January 31, 2015, home merchandise accounted for 12.0% of the net sales, up from 11.0% in fiscal 2013. In April 2015, JCPenney partnered with actress Eva Longoria to launch an exclusive bedding collection in over 100 stores and on the company’s website.

JCPenney also relaunched its printed home catalog in March 2015 after a gap of five years. JCPenney plans to launch its second home catalog in the fall of 2015. JCPenney makes up ~1.0% of the portfolio holdings of the SPDR S&P Retail ETF (XRT).

Home products accounted for 16% and 18% of Macy’s (M) and Kohl’s (KSS) net sales, respectively. Macy’s and Kohl’s together account for about 0.2% of the portfolio holdings of the SPDR S&P 500 ETF (SPY).

Footwear

JCPenney is expanding its women’s shoe department with a combination of sit-and-fit and open-sell environments. The company expects this expansion to be completed by August 1. Also, it is moving men’s shoes to the men’s department in an open-sell environment.

Center core products

JCPenney is focusing on its high margin center core products, which includes handbags, fashion accessories, sunglasses, and fashion jewelry. At the consumer conference, the company mentioned the recent addition of a new line of Liz Claiborne to its handbags assortment.

The company’s Sephora store-in-stores are also a key aspect of JCPenney’s core strategy. We will discuss this in our next article.

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