JCPenney Eyes Growth in Home Category and Reaffirms Guidance

(Continued from Prior Part)

Strengthening the home department

In part two of this series, we discussed JCPenney’s (JCP) decision to expand the availability of appliances to about 500 stores and jcp.com. On May 9, JCPenney also announced other initiatives to strengthen its home department. JCPenney aims to enhance its offerings in window coverings by allocating an additional 25% of floor space to an enhanced display of ready-made curtains, blinds, shades, and decorative hardware.

JCPenney offers window treatments from private brands such as JCPenney Home, Royal Velvet, Liz Claiborne and Studio, as well as from national brands like Bali, Levolor, and Umbra.

Revamping the home business

JCPenney has been taking several initiatives to revamp its home business including bringing back a printed home catalog in March 2015, restoring key private and national brands in the home category, and bringing back appliances.

On May 9, JCPenney announced that it will test new initiatives with Ashley Furniture and Empire Today. The company will be adding Signature Design by Ashley, a leading furniture brand, to its furniture assortment in select stores and jcp.com by Memorial Day weekend.

Pursuant to a venture with Empire Today, a leading player in the installed carpet and flooring industry, JCPenney will test the availability of flooring solutions in the Tampa, Florida, and Washington, D.C., markets beginning this summer.

Other focus areas

Aside from focusing on the home business, JCPenney is also enhancing its Sephora beauty business and the center core area in its stores. The center core shopping area includes fashion jewelry, handbags, sunglasses, and fashion accessories. JCPenney aims to redesign the center core shopping area of over one-third of its stores in the first half of fiscal 2016. The iShares Core S&P Mid-Cap ETF (IJH) has 0.2% exposure to JCPenney.

In April 2016, the company celebrated ten years of its association with Sephora stores inside JCPenney with the opening of 60 new locations, including a new flagship store slated to open this fall in Salinas, California. Sephora is owned by the luxury group LVMH Moët Hennessy Louis Vuitton SE (LVMUY) (MC.PA).

JCPenney’s merchandising initiatives are evident in its top line growth. In fiscal 2015 ended January 30, 2016, JCPenney’s sales increased by 3%. Macy’s (M), Dillard’s (DDS), and Kohl’s (KSS) delivered sales growth of -3.7%, -0.4%, and 1%, respectively, in fiscal 2015.

JCPenney is scheduled to report its 1Q16 results on May 13. Analysts expect the company’s 1Q16 sales to grow by 2.4% on a year-over-year basis.