J.C. Penney, the teller of one of U.S. retail’s better recent comeback stories, is benefiting from the retreat of Sears and Macy’s from the nation’s malls, Bloomberg reports.
Macy's earlier this month said it will close 100 stores nationwide, and Sears has been closing stores for years. Mall landlords, facing the disappearance of their long-time anchors, are open to negotiation, leaving Penney with leverage on rent that in some areas is boosting profits. The retailer has fewer than 10 stores that aren’t making money, Penney CEO Marvin Ellison told Bloomberg.
J.C. Penney is still working on its turnaround, but it’s back from the dead, and analysts are giving it props for its emphasis on home, beauty and special sizes apparel, going forward.
J.C. Penney has become the poster child for defying expectations, rebounding from a quasi-zombie state and weathering what many observers thought was a disastrous series of moves that alienated its biggest fans. The turnaround is particularly unexpected given the economy and changing consumer tastes have roiled many much stronger companies.
But J.C. Penney has made a few smart moves, and is benefiting from the accelerating woes of other retailers. At the retailer's analyst conference last week, Ellison noted that the decline of Sears, in particular, is buoying J.C. Penney's return to appliance sales.
"Sears is donating share in appliances,” Ellison said."We have no aspirations to be No. 1 in market share for appliances. To do that, we have to own the inventory. But we think we can be disruptive and can be convenient to our customers."
The retailer appears to be enthusiastically embracing malls at a time when many malls are struggling, a strategy could take some persuasion, analysts say.
Still, J.C. Penney is arguably doing better than its main rival Kohl’s, by doubling down on its successful Sephora shop-in-shop collaboration, boosting sales of home furnishings and appliances just as Sears and Macy’s are closing stores, and working to attract shoppers beyond its main demographic of older women. That’s despite the fact that Kohl’s has inoculated itself from mall-based troubles with free-standing big-box stores with convenient parking. But the J.C. Penney competitor has had a terrible time making its own turnaround efforts stick.
Cowen & Co. analyst Oliver Chen told Bloomberg that J.C. Penney’s aim of improving its store experience to include what it calls retail-tainment “could speak to how the J.C. Penney of the future could be an important destination.”