Penney Cranks It Up
May 1, 2006 12:00 PM
In a sector where suffering has become the norm, mid-tier department store chain J.C. Penney Co. Inc. is excelling. The company in April unveiled an ambitious $1 billion plan to renovate 250 stores and roll out 170 new ones over the next four years. More interesting is that 90 percent of the new openings will occur as Penney's 100,000-square-foot off-mall concept.
It is the most aggressive bout of new store openings for the company in about 20 years. The proliferation of its off-mall concept will heat up its brewing competition with Kohl's Department Stores — the other mid-priced chain oft-cited as having “figured things out.”
Reversing course
Penney's success, and the cranking up of new store openings, is in stark contrast to its historic competitors Federated Department Stores and Sears Holding Corp. Federated is still working its way through paring its portfolio due to redundancies generated by its 2005 merger with May Department Stores. Meanwhile, Sears continues to struggle to find an identity and has failed to get its off-mall concept to take hold.
When announcing the initiative, Penney CFO Robert Cavanaugh said the moves would raise Penney's earnings per share 16 percent per year through 2009. It's also a big turn for a company that was shuttering stores as recently as 2001.
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