J.C. Penney’s newly-hired CFO Jeffrey Davis told The Wall Street Journal that the retailer could improve its ability to cut operational costs and enhance the customer experience by reallocating some of its $400 million in capital spending to be used on technology investments.
Davis, who took over the position in July, said he wants to cut general, administrative and sales expenses through technology investment, but also believes the retailer should invest in new technology to help it apply data collected from to enhance customer experiences and influence pricing decisions.
J.C. Penney earlier this month reported second quarter sales that represented a 1.5% increase over the year-ago period, but also reported a quarterly loss of $62 million, compared with a loss of $56 million in the second quarter of 2016. Same-store sales also declined slightly.
Davis' appointment as CFO was seen by some investors as a move that would have some immediate positive impact on the struggling retailer. After all, Davis had been CFO of Walmart's U.S. store operations and CFO of the massive Darden Restaurants, operator of Olive Garden and other restaurant chains, in years past.
Of course, improving J.C. Penney's bottom line isn't something that will immediately resolve by matching the right name to the right job. It's a more practical and gradual process, and it sounds like what Davis has in mind is an effort to invest in new technology where it makes sense to help save money on some operational processes, but also to improve how J.C. Penney can apply data and analytics to improve the customer experience. (J.C. Penney did not respond to an email from Retail Dive seeking further comment.)
Davis had a tenure of more than nine years at Walmart, the last year or so of which he spent as CFO for Walmart stores, ending in mid-2015. Though it is hard to say how much he personally influenced Walmart's pivot toward increasing technology investments, his work there certainly coincided with the beginning of Walmart's 2014 and 2015 increase in e-commerce and technology investment. He was perhaps able to see first hand how spending more on technology instead of, for example, real estate and actual physical store space, could help drive customer interest in engaging with a retail brand.
From his interview with the Journal, it's clear Davis believes technology investments can be pursued at the same time J.C. Penney continues to reduce its debt and distance itself from store closings of the kind that ate up its profit margins during the second quarter as it liquidated inventory. Technology usually can't be the sole savior for a company in challenging circumstances, but it can help it find a foothold to boost itself out of a hole. Investing in new technology might also help J.C. Penney catch up with retailers who have been investing more aggressively in new tech to create a stronger bond with customers.