JC Penney 3Q15 Earnings Call Notes

J. C. Penney (JCP) Marvin R. Ellison on Q3 2015 Results

3Q very challenging macro

“The third quarter was clearly challenging from a macro perspective. But at JCPenney we focus on controlling what we control, and this focus is represented by our ability to grow sales by 6.4% in the face of unprecedented warm temperatures”

We were pleased with back to school performance

“we were very pleased with our sales performance over the all-important back-to-school selling period.”

Improving in the science of retailing

“we’re focused on improving and enhancing the science of retail at JCPenney. As I mentioned before, we are great at the art of retailing, areas of design, styles, store aesthetics, and merchandise presentation. And we’re not very good, but improving, in what I call the science of retailing, areas of data analytics, inventory replenishment, assortment and item planning, and process execution.”

We’re winning, taking back market share

“the exciting takeaway for me is that we’re winning versus the competition. We are reclaiming market share despite significant opportunities that remain to improve the way we use data and customer analytics.”

Reducing pension plan obligations by 1/3

“We recently announced a series of pension transactions that materially reduced the company’s pension obligation by between $1.250 billion to $1.750 billion. These proactive actions further the company’s objective of de-risking the plan and reducing pension volatility while improving our long-term risk profile.”

We already have 5m square feet of distribution center space thanks to our heritage as a catalog retailer

“At JCPenney, we have a rich heritage of being a catalog retailer. Therefore, most of our Omnichannel infrastructure is in place. As an example, we have three large .com distribution centers strategically located with approximately 5 million square feet of space.”

Transaction and traffic was up despite macro

“transaction and traffic was up, so we’re excited about that. What I can tell you is although we don’t give in-the-quarter sales guidance, where we have more moderate weather, we’re performing better. ”

Working hard to reduce labor activity in stores that is not going to serving customers

“we are working very hard to make sure that we are reducing the non-value-added activity that exists in our stores, the tasks that have nothing to do with serving customers or driving sales. As we reduce those tasks, we’ll have the ability to reallocate those activities to the sales floor to drive improved service and to make sure that we continue to take advantage of conversion opportunities.”

We really believe in radio

“digital impressions are up dramatically over prior years. But so are radio. We really believe in radio and radio impressions will be up dramatically as well. TV is up slightly and then, direct mail and preprints are down a little bit to help pay for the digital and radio impressions.”

It’s good to tie instinct with data

“we are going through the process of building a team and building a database so that we can have a more thoughtful approach to elasticity, to liquidation schedules, to promotional cadence and understanding the true value of promotions. A lot of things that we do are from pure instinct. The good news is we have a lot of instinctive knowledge here. But what I’ve learned in retail is instinct, that tie with data is very powerful. And we have instinct without data and we’re building data to leverage the instinct.”