JCPenney says it stands to profit from turmoil in the retail industry that’s causing Sears and Macy’s to shut down stores.
In an interview with CNBC on Wednesday, JCPenney CEO Marvin Ellison revealed the bright side to other companies’ woes.
“You’ve said that you hope to pick up some shoppers that perhaps are leaving Sears as Sears closes stores,” CNBC’s Courtney Reagan asked. “What about all the Macy’s store closures? If a Macy’s closes in a mall where there’s also a JCPenney and/or Sears, what does that mean for you? What happens with traffic flows?”
Here’s what Ellison said:
“Our historical trends tell us that it is a net positive to JCPenney. When we share a mall with Sears and they close, we gain market share. So it’s a net positive for sales growth. When Macy’s closes in a mall, historically, it’s been a net positive,” he said.
Major store closures are “well telegraphed,” he said, meaning JCPenney knows where and when store closures are happening. This allows the brand to immediately zero in on attracting customers to JCPenney. He also pointed out that these shuttered stores could be replaced in malls by places like restaurants or movie theatres, which don’t directly compete with JCPenney and attract foot traffic.
Macy’s recently announced that it would be shuttering approximately 100 stores, following six quarters of declining sales. A recent trip to Macy’s flagship store in Manhattan shows just how neglected the once-prestigious brand now is.
Unlike these two ailing brands, JCPenney has been an anomaly: in its most recent quarter, it reported a 2.2% increase in comparable sales.
“Since becoming CEO a year ago, the team and I have made considerable progress balancing the art and science of retail by improving our execution in omnichannel, marketing, store operations, supply chain and merchandising,” Ellison said in a recent press release. “There is still much work to do, but I am confident that our focus on sales growth, new technology and expense management will continue to accelerate our turnaround and create shareholder value.”
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