JC Penney 1Q16 Earnings Call Notes

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Marvin R. Ellison – Chief Executive Officer & Director

Disappointed in our results

” The first quarter was clearly challenging from a top line perspective, and we’re disappointed in our results relative to our own expectations. As you’ve heard throughout the week from other retailers, top line sales were negatively impacted by many factors outside of our control”

Consumer is spending more dollars on experiences and beautifying their home

“And candidly, our over-reliance on apparel hurt us in times during the first quarter, when weather patterns were not conducive to apparel sales. And the consumer was simply spending their hard-earned dollars on experiences, entertainment and to beautify their home. While apparel will always be important to JCPenney, we’ve conducted a detailed review of our customer current and future shopping patterns, and we’ll start to strategically shift our merchandising mix to sell more products and services that correlate to where customers are spending the greater percent of their dollars.”

Trend got a little bit better in the end of April

“Thanks. It’s very, very basic approach. I mean, we’re taking a hard look at the trend. Obviously, as we mentioned, the first part of April was very challenging, but we had positive comps towards the end of the month, and we had a positive selling environment for that whole Mother’s Day selling period. So we left the month of April and entered (27:35) the month of May with some confidence. ”

We feel like we outperformed our peers in the tough environment

“As we listened to our peers in the competitive space, we actually feel a little better that we really actually outperformed based on the headwinds that we were up against. So I would say, there are always things that we look back on that we could have done differently as it relates to timing of promotions, as it relates to the efficiency of our execution”

Customers spending on entertainment, experiences

“when we look at our categories, and we look at what customers are spending, you’ve heard the data all week, it’s entertainment, it’s experiences, it’s home beautification, and apparel was down because of the share of wallet with other places.”

Pleased with the Mother’s Day selling season

“We were pleased with the Mother’s Day selling season. And that’s something that actually gave us confidence, at least coming out of the first quarter, to hold our sales guidance for the year. We continue to work each day, each week. But for that entire selling season, Mother’s Day, we feel good about the progress we made.”