The company’s problem mall stores were closed six or seven years ago, noted Myron E. (Mike) Ullman III, chairman and CEO. The vast majority of Penney’s new stores are in its off-mall format, in part because of dramatic slowdown in new mall development. Relocating to shuttered anchors in malls is being examined closely.
“Given that we want to keep flexible, we don’t want to take someone else’s problem and make it our own,” Ullman said. “There is going to be a lot more consolidation than has been announced, in our view.”
Plans call for opening 35 new or relocated units in 2008. One store originally scheduled for this year has been deferred to 2009. The company also will renovate a total of 20 stores this year. The company will open 12 new stores in the third quarter, 11 of them in the off-mall format. The chain also continues to expand its Sephora in-store makeup boutiques, and will open 10 in the third quarter for a total of 91.
“[Sephora] continues to be one of the strongest aspects of the business and will expand,” said Ken C. Hicks, president and chief merchandising officer
Total sales were $4.3 billion, down 2.5% from the same period last year. Comparable store sales decreased 4.3%. Net income was $117 million, down 35.7% from the previous year.
The company opened 12 new and relocated stores in the quarter, including 11 in the off-mall format. J. C. Penney operates 1,083 department stores throughout the United States and Puerto Rico.
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