Dive Brief:
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J.C. Penney on Thursday announced plans to put more than $1 billion by fiscal 2025 toward improving its operations and customer experience.
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The department store will invest in digital capabilities, in-store upgrades including tech, and merchandising and supply chain improvements. Plans also entail boosting the retailer’s appeal through inclusive and affordable merchandising, customer service and local community engagement.
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Since emerging from bankruptcy over two years ago, the company continues to struggle. Last year net sales fell 3.4% year over year to $7.6 billion, and net income plummeted 36.3% to $221 million.
Dive Insight:
This latest plan from J.C. Penney builds on investments already made since the department store was snapped up out of bankruptcy by two of its landlords, Simon Property Group and Brookfield, in late 2020. Brand management firm Authentic Brands Group also recently took a stake of nearly 17%.
The retailer has worked to improve stores and create beauty spaces that were vacated by Sephora when the beauty specialist left to pursue a partnership with Kohl’s, Simon Property Group CEO David Simon told analysts earlier this year.
In a statement Thursday, J.C. Penney CEO Marc Rosen said the retailer is “poised for continued growth.”
“J.C. Penney is on strong financial footing and is steadily increasing relevance and frequency with our core customers,” he said.
The company hasn’t released its financial results since being acquired out of bankruptcy by the mall REITs, but detailed financial information is being provided to the Securities and Exchange Commission by a property trust tasked with selling some Penney stores.
Notably absent from the newly announced strategy are any plans to shrink stores, reduce the company’s fleet or move away from malls, many of which are owned by Penney’s new owners. Rivals Kohl’s and Macy’s in recent months have announced plans to run more smaller stores. Kohl’s already operates mostly in strip-style centers, and Macy’s has greatly expanded plans to open more small-format stores away from the mall. J.C. Penney didn’t immediately respond to questions about whether it will explore such options.
But neither a change in venue nor a billion-dollar investment is likely to help the department store much at this point, according to Nick Egelanian, president of retail development firm SiteWorks.
“All the money in the world cannot fix a relevancy problem,” he said by email. “J.C. Penney is an obsolete retail concept in obsolete real estate with an obsolete business strategy.”
