During Marvin Ellison’s 15 months as CEO of J.C. Penney, he has been thoroughly impressed and blown away by the store associates’ “warrior spirit” that drives the internal culture and has triggered positive fiscal results for the company. Increased customer engagement and brand loyalty are headed in the right direction at J.C. Penney.
“In my 15 months here, I’ve visited approximately 100 stores and conducted over 70 town halls with associates,” Ellison said during the Feb. 26 fourth-quarter and full-year conference call, according to Seeking Alpha. “And during this time, I’ve come to love and appreciate the J.C. Penney culture. And this culture is the backbone of the company. And our associates’ warrior spirit continues to drive these improved results. And I'd like to take a moment to thank the over 100,000 store, supply chain and home office associates, not only for their hard work, but for buying into our new strategic focus.
Fourth-quarter comparable sales increased 4.1% in the quarter and accelerated to a two-year stack of 8.5%.
“Our performance clearly indicates that our commitment to reducing expenses, while driving our strategic framework of private brands,” Ellison explained. “Omnichannel revenue per customer is paying off. For the full year, we met or exceeded all components of our guidance and delivered 155% increase in adjusted EBITDA for the year.”
Ellison said that J.C. Penney gained market share throughout 2015 and offered basic reasons why the company’s fourth-quarter and full-year results outperformed the market.
“First, we’re regaining market share from that was lost from 2011 through 2013,” he explained. “Our intense focus on value is bringing these customers back to J.C. Penney. Second, Sephora inside J.C. Penney continues to be a point of differentiation. And we’ll continue to gain market share by organically growing sales in existing stores and by adding new locations. Third, the re-establishment of key private and exclusive brands like St. John’s Bay, Royal Velvet, Cooks, and Ambrielle and delivering new brands like the Collection by Michael Strahan, Disney Apparel by Okie Dokie and BELLE + SKY has resonated with existing customers and attracted new customers.”
Fourth, “we’re repairing a broken online business,” Ellison added. “And in the second half of 2015, we developed true omnichannel capabilities. And the development of these capabilities will allow us to share inventory between brick-and-mortar and store locations with our dot-com area and have seamless connections with our customers, how, and when, and where she wants to shop. These new capabilities allowed us to deliver record holiday online sales in the fourth quarter and we’ll continue to have plenty of upside to grow. And fifth, we’re using data to our advantage. Although many results will cite big data as a growth vehicle, I would argue that no modern retailer was as far behind with using data as J.C. Penney between 2011 and 2014. In the first half of 2015: Our store assortments and pricing were not localized; our credit penetration was at an industry low; and our marketing strategy was outdated, which resulted in a low return on ad spend. Therefore, we recruited talented leaders in 2015 and began taking steps in the fall season to modernize our approach to customer and pricing data.”
In the fourth quarter, Ellison added: “This allowed us to improve our return on ad spend, better manage our seasonal markdowns and improve our credit penetration. We also began the process to assort our stores based on local needs and better understanding the pricing elasticity to remain competitive, while protecting our bottom line. Although localization and data analytics are not groundbreaking retail initiatives, they are new to J.C. Penney and will be significantly accretive to our business. Because of these reasons and many more, we’re confident that we have the ability to grow top line and improve our gross margin over the next three years.”