JC Penney 4Q16 Earnings Call Notes

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Marvin R. Ellison

Elements of the retail environment remain uncertain

” While we were very optimistic on our growth initiatives on 2017 plans, our 2017 guidance is conservative as we expect elements of the retail environment to remain uncertain. Clearly, if we see improvement in the environment relative to our current expectations, we’d expect to beat our sales guidance. But we want to plan the business conservatively based on what we saw in 2016.”

Able to talk about earnings again

” In the past, because we did not have positive earnings, EBITDA was really the only measurement we could track toward. But because we expect to deliver positive earnings for 2017, we’ll continue to talk about earnings as our key guidepost, but EBITDA remains important.”

We were slow to react to the casualization of America

“But I think we were slow to really adjust to some of the trend changes in the – I call it the casualization of America. And we were one of the last retailers to really get into the activewear trend in a big way. We feel great about the changes we’ve made specifically in activewear with Nike and adidas. And also our Xersion private brand activewear category is performing exceptionally well. So, it’s all about transitioning to a good balance between career and casual. It’s also about looking at the fact that we said we were over-assorted.”

No reasons why the consumer should be pulling back

” on more of a big picture perspective on kind of where we are in this industry, I’ll give you my thoughts. I think the state of the consumer from every measurement we look at, I mean, that there are no red flags out there why the consumers should be pulling back. Unemployment is stable. Wages are relatively up. And so, we don’t see anything from a macro standpoint that gives us any concern. There’s been some noise about delayed tax returns in February, but we know that those things will balance itself out throughout this quarter. So, it’s not something we’re spending a ton of time on.”