Turnaround of JC Penny

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Case Details:

Case Code : BSTR160
Case Length : 15 Pages
Period : 1990 - 2005
Organization : J C PENNEY
Pub Date : 2005
Teaching Note : Available
Countries : USA
Industry : Retailing

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note Contd...

Within two years, another store was opened and in 1907, Penney bought the stakes of his partners. The company showed spectacular growth and in 1920, it had 312 stores in 26 states. It was incorporated as The J C Penney Company in 1924. By 1930, JCP was operating 1,452 stores and had 25,000 associates3 on its rolls. Its sales revenue exceeded $ 1 billion in 1951 and in 1964, it doubled to $ 2 billion from nearly 1700 stores.

In 1998, JCP launched its Internet store through which the company put its 250,000 products online. JCP, which provided merchandise and services through department stores, catalogs, and the Internet, had a net sale of $17 billion in 2003.

In 2003, JCP had 1020 department stores in the US and 58 Renner4 department stores in Brazil (Refer Exhibit I (a) and I (b) for a list of JCP stores). It had an employee strength of 150,000 associates and was the largest catalog merchant of general merchandise in US. The catalog ordering network of JCP, JCPenney Direct (Direct), handled 35 million telephone calls in 2003.

Direct's four logistics centers processed more than 33 million orders in 2003. Catalog sales and sales through the Internet totaled $2.6 billion in 2003. Marketing synergy among retail stores, catalog offerings, and online sales resulted in annual online sales growing from $15 million in 1998 to more than $600 million in 2003. In 2004, the online store of JCP had a conversion factor of 10.1%5, the highest among its general merchandise peers.

Some of JCP's brands were JCPenney Home Collection, St John's Bay, Arizona, Worthington, Stafford, Delicates, and Okie Dokie. JCP also offered salon services, optical services, portrait photography, and custom decorating. In 2004, JCP sold its Eckerd Drugstore chain6 to CVS Corp. and the Jean Coutu Group Inc. for $4.5 billion...

Excerpts >>

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3] JCP employees were referred to as associates.

4] JCP entered Brazil in 1998 by acquiring Renner, a non-food retailer. JCP retained the Renner name in Brazil.

5] A 10.1% conversion factor indicates that 10.1% of site visitors ended up buying from the online store.

6] JCP acquired the Eckerd drugstore store chain in 1996-97.


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