1 00:00:02,360 --> 00:00:07,520 Speaker 1: Bloomberg Audio Studios, podcasts, radio news, JC. 2 00:00:07,520 --> 00:00:10,600 Speaker 2: Penny in the midst of a one billion dollar reinvestment 3 00:00:10,640 --> 00:00:13,920 Speaker 2: plan to enhance the customer experience. Here with us now, 4 00:00:14,000 --> 00:00:15,960 Speaker 2: I am pleased to say we have Mark Rosen. He 5 00:00:16,120 --> 00:00:19,119 Speaker 2: is the CEO of JC Penny. So you announced that 6 00:00:19,160 --> 00:00:22,920 Speaker 2: one billion dollar reinvestment strategy last August. We almost a 7 00:00:23,000 --> 00:00:26,440 Speaker 2: year in. So what has been accomplished, but more importantly, 8 00:00:26,680 --> 00:00:27,720 Speaker 2: what is left still to do? 9 00:00:29,000 --> 00:00:31,200 Speaker 3: Yeah, good morning, and thank you for having me. So 10 00:00:31,560 --> 00:00:34,280 Speaker 3: we announced, as you said, about a year ago, a 11 00:00:34,320 --> 00:00:38,120 Speaker 3: billion dollar self funded reinvestment in the business as we 12 00:00:38,159 --> 00:00:42,120 Speaker 3: reinvigorate JC penny. And what you've seen is, first of all, 13 00:00:42,200 --> 00:00:45,800 Speaker 3: shopping experience. So the shopping experience is obviously incredibly important 14 00:00:45,800 --> 00:00:48,519 Speaker 3: to us and to our customer And as far as 15 00:00:48,520 --> 00:00:52,000 Speaker 3: shopping experience goes, we've invested a lot in remodeling our stores. 16 00:00:52,080 --> 00:00:54,960 Speaker 1: So by the end of this year, we'll have almost 17 00:00:55,000 --> 00:00:55,800 Speaker 1: a third. 18 00:00:55,680 --> 00:00:58,920 Speaker 3: Of our store fleet will be remodeled, and customers will 19 00:00:58,960 --> 00:01:01,680 Speaker 3: find a new shopping experience when they come into those stores. 20 00:01:02,000 --> 00:01:04,919 Speaker 3: They're also going to find a new shopping experience online, 21 00:01:04,959 --> 00:01:07,920 Speaker 3: easier search, easier to find the product they're looking for, 22 00:01:08,280 --> 00:01:11,479 Speaker 3: and more fashion inspirations. So shopping experience is a big 23 00:01:11,520 --> 00:01:14,840 Speaker 3: part of the investment. Supply chain and technology is another 24 00:01:14,880 --> 00:01:17,240 Speaker 3: big part of the investment, and we've invested a lot 25 00:01:17,240 --> 00:01:20,839 Speaker 3: in new technology for our merchants and for our inventory 26 00:01:20,880 --> 00:01:22,640 Speaker 3: planners to make sure that we have the right things 27 00:01:22,680 --> 00:01:24,880 Speaker 3: in the right place for the customer. And then we 28 00:01:25,200 --> 00:01:28,800 Speaker 3: just rolled out in our Reno distribution center a new 29 00:01:28,880 --> 00:01:33,880 Speaker 3: sorting system and a new system that will allow the 30 00:01:33,920 --> 00:01:37,520 Speaker 3: distribution center to pick orders more efficiently and to make 31 00:01:37,560 --> 00:01:40,280 Speaker 3: sure that we're more accurately getting those orders to the customer. 32 00:01:40,360 --> 00:01:42,920 Speaker 3: So supply chain and technology is another key part of it, 33 00:01:43,200 --> 00:01:46,280 Speaker 3: and a third part is really around the brand, And 34 00:01:46,760 --> 00:01:49,920 Speaker 3: in conjunction with that announcement, last fall, we rolled out 35 00:01:49,960 --> 00:01:54,040 Speaker 3: our new brand platform, make Account, which is all about 36 00:01:54,080 --> 00:01:56,640 Speaker 3: making sure that the customer understands that they're going to 37 00:01:56,640 --> 00:02:01,600 Speaker 3: find accessible fashion, a rewarding shopping eperience at jcpenny, and 38 00:02:01,640 --> 00:02:03,640 Speaker 3: that we stand by them and their communities. And if 39 00:02:03,680 --> 00:02:07,520 Speaker 3: we talk about rewarding shopping experience. In April, we rolled 40 00:02:07,520 --> 00:02:09,960 Speaker 3: out a new rewards program for our customers, and we've 41 00:02:10,000 --> 00:02:13,480 Speaker 3: seen sign ups increase significantly since we rolled out that program, 42 00:02:13,600 --> 00:02:16,720 Speaker 3: right and we've also seen customers earn more points and 43 00:02:16,800 --> 00:02:19,440 Speaker 3: coming back to shop and redeeming those points, which is 44 00:02:19,480 --> 00:02:22,000 Speaker 3: really driving shopping frequency as we go into the back 45 00:02:22,040 --> 00:02:22,840 Speaker 3: to school season. 46 00:02:23,040 --> 00:02:24,840 Speaker 2: Well, Mark, there's a lot to dig into there, but 47 00:02:24,880 --> 00:02:26,320 Speaker 2: I do want to talk a little bit more about 48 00:02:26,320 --> 00:02:30,120 Speaker 2: how people are shopping. Of course, shoppers increasingly moving online, 49 00:02:30,240 --> 00:02:32,880 Speaker 2: but when it comes to your physical footprint, it was 50 00:02:32,960 --> 00:02:35,720 Speaker 2: interesting you actually heard in May Simon Property Group CEO 51 00:02:35,800 --> 00:02:39,720 Speaker 2: David Simon say that jcpenny could benefit from opening more 52 00:02:39,760 --> 00:02:42,680 Speaker 2: physical stores. I know that you recently opened a new 53 00:02:42,720 --> 00:02:45,080 Speaker 2: location in New Jersey, but when you look to the 54 00:02:45,120 --> 00:02:48,519 Speaker 2: future and this reinvestment plan, does that include more brick 55 00:02:48,560 --> 00:02:49,440 Speaker 2: and mortar stores. 56 00:02:50,600 --> 00:02:53,240 Speaker 3: Right So, we have about six hundred and sixty stores 57 00:02:53,320 --> 00:02:56,000 Speaker 3: right now, and stores are a really important part of 58 00:02:56,040 --> 00:02:58,800 Speaker 3: our shopping experience. If you look at how the customer shops, 59 00:02:59,080 --> 00:03:02,040 Speaker 3: about a third of our shopping is online right now 60 00:03:02,080 --> 00:03:04,600 Speaker 3: and about two thirds is in stores. But really that 61 00:03:04,639 --> 00:03:08,360 Speaker 3: makes it sound much too much, too pure. In other words, 62 00:03:08,360 --> 00:03:11,360 Speaker 3: the customers starting out online, they're looking and finding the items, 63 00:03:11,360 --> 00:03:13,880 Speaker 3: they're doing research, and then they're coming into stores. Stores 64 00:03:13,960 --> 00:03:17,079 Speaker 3: are a really important part of that shopping experience. It's 65 00:03:17,080 --> 00:03:20,840 Speaker 3: a social experience, Customers want to try product on. And so, 66 00:03:21,000 --> 00:03:24,400 Speaker 3: as you mentioned, this spring, we opened a brand new 67 00:03:24,440 --> 00:03:27,360 Speaker 3: store in Wayne, New Jersey, and we're really excited about 68 00:03:27,400 --> 00:03:30,600 Speaker 3: that store. It's an all open shopping environment and it 69 00:03:30,639 --> 00:03:33,639 Speaker 3: really allows us to showcase the products and the brands 70 00:03:33,680 --> 00:03:37,640 Speaker 3: and give the consumer a great shopping experience. And so 71 00:03:37,720 --> 00:03:40,400 Speaker 3: that's really important as we move forward through the transformation. 72 00:03:40,760 --> 00:03:43,720 Speaker 4: I note you took over only a couple of years ago, Mark, 73 00:03:43,840 --> 00:03:47,200 Speaker 4: but I'm sure the President Biden is going to be 74 00:03:47,320 --> 00:03:49,640 Speaker 4: asking voters, you know, if they're better off now than 75 00:03:49,640 --> 00:03:53,280 Speaker 4: they were four years ago, what about your customers? How 76 00:03:53,360 --> 00:03:54,480 Speaker 4: are they faring right now? 77 00:03:54,560 --> 00:03:58,760 Speaker 3: Your consumers right So it's interesting as we think about 78 00:03:58,840 --> 00:04:01,840 Speaker 3: our customer and our customer or really is the core 79 00:04:02,000 --> 00:04:05,280 Speaker 3: of America Our customers, America's diverse working families, and our 80 00:04:05,280 --> 00:04:09,160 Speaker 3: customer is the school teacher who's teaching our children. It 81 00:04:09,240 --> 00:04:11,360 Speaker 3: is the medical worker who is taking care of us 82 00:04:11,440 --> 00:04:14,040 Speaker 3: and our families. And it's the construction workers who are 83 00:04:14,080 --> 00:04:16,240 Speaker 3: building the homes and the offices that we live in. 84 00:04:16,400 --> 00:04:21,200 Speaker 3: And so for our customer, inflation has been very, very difficult. 85 00:04:21,800 --> 00:04:24,640 Speaker 3: And what I say is that our customers often the 86 00:04:24,680 --> 00:04:27,640 Speaker 3: first to suffer as inflation hits, and they're the last 87 00:04:27,720 --> 00:04:31,279 Speaker 3: to recover as that happens. In other words, inflation hits 88 00:04:31,320 --> 00:04:34,719 Speaker 3: and those mortgage prices, those rent prices go up, and 89 00:04:34,760 --> 00:04:37,480 Speaker 3: those prices stay up. They're sticky, they don't come down 90 00:04:37,560 --> 00:04:40,440 Speaker 3: right away, and that impacts our customers in a big way. 91 00:04:40,480 --> 00:04:44,000 Speaker 3: And it's another reason that value is really really important 92 00:04:44,000 --> 00:04:44,719 Speaker 3: to our customers. 93 00:04:44,720 --> 00:04:45,960 Speaker 1: So what we're focused. 94 00:04:45,600 --> 00:04:47,320 Speaker 3: Right now as we go into back to school and 95 00:04:47,360 --> 00:04:50,000 Speaker 3: as the customer shopping for back to school, is making 96 00:04:50,040 --> 00:04:52,760 Speaker 3: sure that we're bringing them incredible value so that they 97 00:04:52,800 --> 00:04:55,400 Speaker 3: can get what they need for their family in these moments. 98 00:04:55,640 --> 00:04:57,880 Speaker 5: Yeah, if you look at the JZ Penny website right now, 99 00:04:57,880 --> 00:05:00,480 Speaker 5: you do have a lot of deals out there. Wondering 100 00:05:00,600 --> 00:05:03,520 Speaker 5: if you take a look to your point, middle to 101 00:05:03,560 --> 00:05:07,960 Speaker 5: low end consumers across corporate America have shown lots of 102 00:05:08,040 --> 00:05:10,400 Speaker 5: signs of weakness. How much more do you have to 103 00:05:10,520 --> 00:05:13,320 Speaker 5: mark items down now to bring in that consumer. 104 00:05:14,480 --> 00:05:17,119 Speaker 3: Well, I think what's really important to them is showing 105 00:05:17,120 --> 00:05:20,120 Speaker 3: them that they can find the fashion that they want. 106 00:05:20,200 --> 00:05:22,480 Speaker 3: Fashion is really important to our consumer, but they can 107 00:05:22,560 --> 00:05:25,520 Speaker 3: also find it at a great price. So you're right, 108 00:05:25,560 --> 00:05:27,200 Speaker 3: if you look at our site right now, and if 109 00:05:27,240 --> 00:05:29,880 Speaker 3: you go into our stores right now, we're in black 110 00:05:29,920 --> 00:05:32,400 Speaker 3: Friday and July. Back to school is really important. That's 111 00:05:32,440 --> 00:05:34,839 Speaker 3: top of mind for our customer right now. If they're 112 00:05:34,839 --> 00:05:37,240 Speaker 3: shopping for a college student moving into the dorm, they're 113 00:05:37,240 --> 00:05:39,839 Speaker 3: going to find bath towels for two ninety nine. And 114 00:05:39,839 --> 00:05:42,039 Speaker 3: if they're shopping for their kids going back to school, 115 00:05:42,040 --> 00:05:44,320 Speaker 3: they're going to find t shirts for four ninety nine. 116 00:05:44,560 --> 00:05:47,640 Speaker 3: So we have about seven thousand items under twenty dollars 117 00:05:47,640 --> 00:05:50,760 Speaker 3: for the whole family, and over fifteen hundred items that 118 00:05:50,800 --> 00:05:54,120 Speaker 3: are under ten dollars, and that's in kids apparel, So 119 00:05:54,200 --> 00:05:56,880 Speaker 3: that value is really really important. I think one of 120 00:05:56,920 --> 00:05:59,680 Speaker 3: the things that we have at jcpenny is the power 121 00:05:59,760 --> 00:06:02,520 Speaker 3: of our private label brands. And we have great brands 122 00:06:02,560 --> 00:06:05,400 Speaker 3: that we design and source and produce, and we can 123 00:06:05,440 --> 00:06:07,320 Speaker 3: bring them to the customer to great value in a 124 00:06:07,360 --> 00:06:08,680 Speaker 3: great savings And. 125 00:06:08,720 --> 00:06:11,640 Speaker 5: I'm also curious about your long game here, Mark, there 126 00:06:11,680 --> 00:06:14,040 Speaker 5: was a time where JC penny was under very severe 127 00:06:14,120 --> 00:06:17,960 Speaker 5: distress and really you're leading a turnaround story here. What 128 00:06:18,120 --> 00:06:22,479 Speaker 5: does JC penny look like three five years from now? 129 00:06:22,520 --> 00:06:25,560 Speaker 1: Financially right we're really focused. I'm sorry I missed the last 130 00:06:25,560 --> 00:06:26,400 Speaker 1: pot so financially. 131 00:06:27,760 --> 00:06:31,719 Speaker 3: Financially okay, So we're really focused on the customer and 132 00:06:31,720 --> 00:06:34,440 Speaker 3: that customer experience and bringing the customer a great shopping experience, 133 00:06:34,440 --> 00:06:36,160 Speaker 3: and we know at the end of the day that's 134 00:06:36,200 --> 00:06:38,640 Speaker 3: what's going to drive great financial results. 135 00:06:39,120 --> 00:06:41,200 Speaker 1: If you look at the business. 136 00:06:40,839 --> 00:06:44,880 Speaker 3: Right now, we have one of the cleanest balance sheets 137 00:06:44,920 --> 00:06:47,719 Speaker 3: in the entire industry, and that's very important. So we 138 00:06:47,800 --> 00:06:51,479 Speaker 3: have under half a billion dollars of debt on the 139 00:06:51,520 --> 00:06:53,800 Speaker 3: balance sheet right now, so a very clean balance sheet, 140 00:06:53,839 --> 00:06:56,839 Speaker 3: over one point six billion dollars of liquidity, and the 141 00:06:56,880 --> 00:06:59,000 Speaker 3: business is generating strong cash flow. 142 00:06:59,279 --> 00:07:01,239 Speaker 1: And it's that cash flow when you go back. 143 00:07:01,080 --> 00:07:04,720 Speaker 3: To the investment and the over a billion dollar investment 144 00:07:04,800 --> 00:07:07,479 Speaker 3: back in the business. That cash flow is what we're 145 00:07:07,560 --> 00:07:10,880 Speaker 3: using to invest back into the business. When I look 146 00:07:10,920 --> 00:07:13,480 Speaker 3: to the future, what I see is this is going 147 00:07:13,520 --> 00:07:15,360 Speaker 3: to be a business that has a mix of stores 148 00:07:15,440 --> 00:07:18,200 Speaker 3: as a mix of online is generating a healthy cash 149 00:07:18,200 --> 00:07:21,960 Speaker 3: flow because we're delivering what the customer needs, which right 150 00:07:21,960 --> 00:07:25,400 Speaker 3: now is great product, accessible fashion at a great value, 151 00:07:25,440 --> 00:07:27,400 Speaker 3: and a really rewarding shopping experience. 152 00:07:27,760 --> 00:07:28,440 Speaker 1: Well Mark, just. 153 00:07:28,360 --> 00:07:30,480 Speaker 2: To follow up on that point again, you look far 154 00:07:30,600 --> 00:07:32,840 Speaker 2: in the future, five years down the line, and I 155 00:07:32,880 --> 00:07:34,800 Speaker 2: hear what you say on there being a lot of 156 00:07:34,840 --> 00:07:37,800 Speaker 2: milestones to hit, but could we see JC Penny go 157 00:07:37,960 --> 00:07:38,600 Speaker 2: public again? 158 00:07:40,960 --> 00:07:44,480 Speaker 3: So right now, as you mentioned, we're private right now, 159 00:07:44,520 --> 00:07:46,560 Speaker 3: and that does give us the advantage of being able 160 00:07:46,600 --> 00:07:49,680 Speaker 3: to invest in this transformation. And that's really important right 161 00:07:49,720 --> 00:07:51,840 Speaker 3: now is to be able to take that cash invested 162 00:07:51,880 --> 00:07:55,520 Speaker 3: in the transformation to really focus on the customer. And 163 00:07:55,840 --> 00:07:58,120 Speaker 3: right now we're we're in what I would say is 164 00:07:58,160 --> 00:08:00,600 Speaker 3: the middle of that transformation. We've did a lot in 165 00:08:00,640 --> 00:08:02,640 Speaker 3: the shopping experience. I said about a third of our 166 00:08:02,680 --> 00:08:05,360 Speaker 3: stores will be remodeled by the end of this year, 167 00:08:05,640 --> 00:08:07,840 Speaker 3: but there's still a lot more to do in terms 168 00:08:07,880 --> 00:08:10,720 Speaker 3: of stores, in the online experience and the shopping experience, 169 00:08:10,920 --> 00:08:13,320 Speaker 3: and we're in the process of reinvigorating our brand. 170 00:08:13,360 --> 00:08:14,920 Speaker 1: So that's what's important to us now. 171 00:08:14,960 --> 00:08:18,120 Speaker 3: We're continuing to drive that cash flow, continuing to reinvest 172 00:08:18,120 --> 00:08:20,680 Speaker 3: in the experience for the customer, and we'll see what 173 00:08:20,720 --> 00:08:21,560 Speaker 3: the future brings. 174 00:08:22,040 --> 00:08:24,840 Speaker 4: I wonder about keeping your employees engage. You know, I spend, 175 00:08:25,320 --> 00:08:27,560 Speaker 4: for whatever reason, a lot of time in big box 176 00:08:27,600 --> 00:08:34,480 Speaker 4: stores here in Westchester, and oftentimes employees are on break 177 00:08:34,800 --> 00:08:38,840 Speaker 4: don't really care you know, messing around with products instead 178 00:08:38,840 --> 00:08:41,760 Speaker 4: of customers. How do you keep them engaged? And how 179 00:08:41,840 --> 00:08:43,720 Speaker 4: much more have you had to pay them over the 180 00:08:43,800 --> 00:08:45,199 Speaker 4: last say, you know. 181 00:08:45,200 --> 00:08:45,840 Speaker 1: Three years? 182 00:08:47,800 --> 00:08:50,400 Speaker 3: Right, So for our customers, I think I joined the 183 00:08:50,440 --> 00:08:51,920 Speaker 3: company about two and a half years ago. 184 00:08:51,760 --> 00:08:54,679 Speaker 1: And when I did, we really united around. 185 00:08:54,400 --> 00:08:56,800 Speaker 3: Our purpose, which is to serve and celebrate with America's 186 00:08:56,840 --> 00:08:59,200 Speaker 3: diverse working families. And the interesting I think the really 187 00:08:59,200 --> 00:09:03,400 Speaker 3: great thing for us is our employees are also America's 188 00:09:03,440 --> 00:09:05,640 Speaker 3: diverse working families, and they see what we're doing for 189 00:09:05,679 --> 00:09:08,400 Speaker 3: their communities and what we're doing for them, and they 190 00:09:08,400 --> 00:09:11,520 Speaker 3: are engaged in the purpose of the company, in the 191 00:09:11,559 --> 00:09:15,839 Speaker 3: culture of the company, and in bringing back and driving. 192 00:09:15,360 --> 00:09:17,040 Speaker 1: Those results that I talked about. 193 00:09:17,080 --> 00:09:20,520 Speaker 3: So that's what's really important in terms of keeping our 194 00:09:21,200 --> 00:09:24,480 Speaker 3: associates engaged. We've actually over the last couple of years 195 00:09:24,480 --> 00:09:27,439 Speaker 3: seen a big increase in our net Promoter score, which 196 00:09:27,480 --> 00:09:30,640 Speaker 3: is how we manage how we measure customer satisfaction when 197 00:09:30,679 --> 00:09:33,760 Speaker 3: customers are in our stores. And so we're really pleased 198 00:09:33,800 --> 00:09:35,680 Speaker 3: with the way that our customers are staying close to 199 00:09:35,679 --> 00:09:38,520 Speaker 3: the customer, engage with the customer, and making sure they 200 00:09:38,520 --> 00:09:40,280 Speaker 3: have a great experience in store and part of the 201 00:09:40,360 --> 00:09:43,520 Speaker 3: investment is also in technology like new point of sale 202 00:09:43,600 --> 00:09:45,760 Speaker 3: technology and mobile point of sale to make sure that 203 00:09:45,760 --> 00:09:48,240 Speaker 3: that customer does have a better experience every time they 204 00:09:48,320 --> 00:09:49,120 Speaker 3: come into the store. 205 00:09:49,200 --> 00:09:52,640 Speaker 4: Mark you place clearly a lot of importance on inclusion 206 00:09:52,840 --> 00:09:56,240 Speaker 4: and diversity. You celebrate diversity events. Is that harder in 207 00:09:56,280 --> 00:09:59,319 Speaker 4: today's climate? We just saw deer you have to back down. 208 00:10:00,000 --> 00:10:03,000 Speaker 4: We're talking about tractor supply. You're in Dallas, Texas. Is 209 00:10:03,040 --> 00:10:03,800 Speaker 4: it harder for you? 210 00:10:05,120 --> 00:10:08,800 Speaker 3: What I would say is again, our customer is America's 211 00:10:08,840 --> 00:10:11,920 Speaker 3: diverse working families, and our customer is a broad set 212 00:10:11,960 --> 00:10:14,559 Speaker 3: that really reflects America. That is the same of our 213 00:10:14,559 --> 00:10:18,160 Speaker 3: employee base. And we are really focused on respect and 214 00:10:18,840 --> 00:10:23,040 Speaker 3: inclusion for all of our customer base and our employee base, 215 00:10:23,120 --> 00:10:25,280 Speaker 3: and it is important to everything that we do. 216 00:10:26,080 --> 00:10:28,040 Speaker 5: Mark, We thank you so much for joining us today. 217 00:10:28,120 --> 00:10:30,080 Speaker 5: Best of luck to you. That is the CEO of 218 00:10:30,440 --> 00:10:32,800 Speaker 5: JC Penny in the middle of a big turnaround.