The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — J.C. Penney has a fashion problem.
All clothing categories at J.C. Penney — men’s, women’s, and kids — posted negative comparative store sales for the quarter. Each fared worse than the retailer’s overall comp sales for the quarter, which fell 3.5 percent.
Chief Executive Officer Marvin Ellison said he has “no great optimism” that the retailer can swing apparel sales into the black, though he noted improvements in the activewear and dress categories, which he said will make up a larger portion of its apparel business going forward.
Weak sales were a common theme across the board for department stores this past quarter, part of a broader trend as physical retail buckles under the weight of e-commerce. Rivals Macy's Inc., Kohl's Corp., and Nordstrom Inc. each reported disappointing sales numbers. One-time department store behemoth Sears Holdings Corp. recently acknowledged "substantial doubt" about its own future. Meanwhile, another wave of store closings is hitting numerous retailers this year — around 140 J.C. Penney stores will close at the end of July.
ADVERTISEMENT
Nevertheless, J.C. Penney is trying to turn things around. It's expanding a partnership with cosmetics giant Sephora, a strong brand that helps draw shoppers into stores, and its appliance and fine jewellery businesses continue to grow. The company also sells a wide variety of fashion items at its stores and online, from swimsuits and casual T-shirts to blazers and evening wear. It sells such clothing labels as Liz Claiborne, Dockers, and St. John's Bay.
Ellison’s strategies did help J.C. Penney post its first profit since 2011 last fiscal year, but the clothing issues continue to hamper progress. Women’s apparel is the retailer’s largest category, accounting for 24 percent of total net sales in fiscal 2016. While there is good news for some categories, the overall picture looks dark.
“It is critical for us to improve the performance of the apparel segment,” said Ellison. “And although our overall apparel business struggled in the first quarter, we were encouraged by the strong customer response to our now trending items in women’s.”
Neil Saunders, an analyst at GlobalData Retail, wrote clients Friday that, for J.C. Penney, “the area in most desperate need of attention is fashion.” He added however that J.C. Penney is moving in the right direction: “Spring collections showed some signs of improvement, but there is much more work to do here if JCP is to turn this into a winning category.”
Ellison reaffirmed his commitment to the apparel business, but went on to say that “we also have to ramp up these other businesses so that we can have more balance across the entire chain,” said Ellison.
By Kim Bhasin; editor: David Rovella.
Fast-growing start-ups like Hettas, Saysh and Moolah Kicks created sneakers designed specifically for active women. The sportswear giants are watching closely.
The companies agreed to cap credit-card swipe fees in one of the most significant antitrust settlements ever, following a legal fight that spanned almost two decades.
In an era of austerity on Wall Street, apparel businesses are more likely to be valued on their profits rather than sales, which usually means lower payouts for founders and investors. That is, if they can find a buyer in the first place.
The fast fashion giant occupies a shrinking middle ground between Shein and Zara. New CEO Daniel Ervér can lay out the path forward when the company reports quarterly results this week.