Speaker 1: Bloomberg Audio Studios, podcasts, radio news, JC.
Speaker 2: Penny in the midst of a one billion dollar reinvestment
Speaker 2: plan to enhance the customer experience. Here with us now,
Speaker 2: I am pleased to say we have Mark Rosen. He
Speaker 2: is the CEO of JC Penny. So you announced that
Speaker 2: one billion dollar reinvestment strategy last August. We almost a
Speaker 2: year in. So what has been accomplished, but more importantly,
Speaker 2: what is left still to do?
Speaker 3: Yeah, good morning, and thank you for having me. So
Speaker 3: we announced, as you said, about a year ago, a
Speaker 3: billion dollar self funded reinvestment in the business as we
Speaker 3: reinvigorate JC penny. And what you've seen is, first of all,
Speaker 3: shopping experience. So the shopping experience is obviously incredibly important
Speaker 3: to us and to our customer And as far as
Speaker 3: shopping experience goes, we've invested a lot in remodeling our stores.
Speaker 1: So by the end of this year, we'll have almost
Speaker 1: a third.
Speaker 3: Of our store fleet will be remodeled, and customers will
Speaker 3: find a new shopping experience when they come into those stores.
Speaker 3: They're also going to find a new shopping experience online,
Speaker 3: easier search, easier to find the product they're looking for,
Speaker 3: and more fashion inspirations. So shopping experience is a big
Speaker 3: part of the investment. Supply chain and technology is another
Speaker 3: big part of the investment, and we've invested a lot
Speaker 3: in new technology for our merchants and for our inventory
Speaker 3: planners to make sure that we have the right things
Speaker 3: in the right place for the customer. And then we
Speaker 3: just rolled out in our Reno distribution center a new
Speaker 3: sorting system and a new system that will allow the
Speaker 3: distribution center to pick orders more efficiently and to make
Speaker 3: sure that we're more accurately getting those orders to the customer.
Speaker 3: So supply chain and technology is another key part of it,
Speaker 3: and a third part is really around the brand, And
Speaker 3: in conjunction with that announcement, last fall, we rolled out
Speaker 3: our new brand platform, make Account, which is all about
Speaker 3: making sure that the customer understands that they're going to
Speaker 3: find accessible fashion, a rewarding shopping eperience at jcpenny, and
Speaker 3: that we stand by them and their communities. And if
Speaker 3: we talk about rewarding shopping experience. In April, we rolled
Speaker 3: out a new rewards program for our customers, and we've
Speaker 3: seen sign ups increase significantly since we rolled out that program,
Speaker 3: right and we've also seen customers earn more points and
Speaker 3: coming back to shop and redeeming those points, which is
Speaker 3: really driving shopping frequency as we go into the back
Speaker 3: to school season.
Speaker 2: Well, Mark, there's a lot to dig into there, but
Speaker 2: I do want to talk a little bit more about
Speaker 2: how people are shopping. Of course, shoppers increasingly moving online,
Speaker 2: but when it comes to your physical footprint, it was
Speaker 2: interesting you actually heard in May Simon Property Group CEO
Speaker 2: David Simon say that jcpenny could benefit from opening more
Speaker 2: physical stores. I know that you recently opened a new
Speaker 2: location in New Jersey, but when you look to the
Speaker 2: future and this reinvestment plan, does that include more brick
Speaker 2: and mortar stores.
Speaker 3: Right So, we have about six hundred and sixty stores
Speaker 3: right now, and stores are a really important part of
Speaker 3: our shopping experience. If you look at how the customer shops,
Speaker 3: about a third of our shopping is online right now
Speaker 3: and about two thirds is in stores. But really that
Speaker 3: makes it sound much too much, too pure. In other words,
Speaker 3: the customers starting out online, they're looking and finding the items,
Speaker 3: they're doing research, and then they're coming into stores. Stores
Speaker 3: are a really important part of that shopping experience. It's
Speaker 3: a social experience, Customers want to try product on. And so,
Speaker 3: as you mentioned, this spring, we opened a brand new
Speaker 3: store in Wayne, New Jersey, and we're really excited about
Speaker 3: that store. It's an all open shopping environment and it
Speaker 3: really allows us to showcase the products and the brands
Speaker 3: and give the consumer a great shopping experience. And so
Speaker 3: that's really important as we move forward through the transformation.
Speaker 4: I note you took over only a couple of years ago, Mark,
Speaker 4: but I'm sure the President Biden is going to be
Speaker 4: asking voters, you know, if they're better off now than
Speaker 4: they were four years ago, what about your customers? How
Speaker 4: are they faring right now?
Speaker 3: Your consumers right So it's interesting as we think about
Speaker 3: our customer and our customer or really is the core
Speaker 3: of America Our customers, America's diverse working families, and our
Speaker 3: customer is the school teacher who's teaching our children. It
Speaker 3: is the medical worker who is taking care of us
Speaker 3: and our families. And it's the construction workers who are
Speaker 3: building the homes and the offices that we live in.
Speaker 3: And so for our customer, inflation has been very, very difficult.
Speaker 3: And what I say is that our customers often the
Speaker 3: first to suffer as inflation hits, and they're the last
Speaker 3: to recover as that happens. In other words, inflation hits
Speaker 3: and those mortgage prices, those rent prices go up, and
Speaker 3: those prices stay up. They're sticky, they don't come down
Speaker 3: right away, and that impacts our customers in a big way.
Speaker 3: And it's another reason that value is really really important
Speaker 3: to our customers.
Speaker 1: So what we're focused.
Speaker 3: Right now as we go into back to school and
Speaker 3: as the customer shopping for back to school, is making
Speaker 3: sure that we're bringing them incredible value so that they
Speaker 3: can get what they need for their family in these moments.
Speaker 5: Yeah, if you look at the JZ Penny website right now,
Speaker 5: you do have a lot of deals out there. Wondering
Speaker 5: if you take a look to your point, middle to
Speaker 5: low end consumers across corporate America have shown lots of
Speaker 5: signs of weakness. How much more do you have to
Speaker 5: mark items down now to bring in that consumer.
Speaker 3: Well, I think what's really important to them is showing
Speaker 3: them that they can find the fashion that they want.
Speaker 3: Fashion is really important to our consumer, but they can
Speaker 3: also find it at a great price. So you're right,
Speaker 3: if you look at our site right now, and if
Speaker 3: you go into our stores right now, we're in black
Speaker 3: Friday and July. Back to school is really important. That's
Speaker 3: top of mind for our customer right now. If they're
Speaker 3: shopping for a college student moving into the dorm, they're
Speaker 3: going to find bath towels for two ninety nine. And
Speaker 3: if they're shopping for their kids going back to school,
Speaker 3: they're going to find t shirts for four ninety nine.
Speaker 3: So we have about seven thousand items under twenty dollars
Speaker 3: for the whole family, and over fifteen hundred items that
Speaker 3: are under ten dollars, and that's in kids apparel, So
Speaker 3: that value is really really important. I think one of
Speaker 3: the things that we have at jcpenny is the power
Speaker 3: of our private label brands. And we have great brands
Speaker 3: that we design and source and produce, and we can
Speaker 3: bring them to the customer to great value in a
Speaker 3: great savings And.
Speaker 5: I'm also curious about your long game here, Mark, there
Speaker 5: was a time where JC penny was under very severe
Speaker 5: distress and really you're leading a turnaround story here. What
Speaker 5: does JC penny look like three five years from now?
Speaker 1: Financially right we're really focused. I'm sorry I missed the last
Speaker 1: pot so financially.
Speaker 3: Financially okay, So we're really focused on the customer and
Speaker 3: that customer experience and bringing the customer a great shopping experience,
Speaker 3: and we know at the end of the day that's
Speaker 3: what's going to drive great financial results.
Speaker 1: If you look at the business.
Speaker 3: Right now, we have one of the cleanest balance sheets
Speaker 3: in the entire industry, and that's very important. So we
Speaker 3: have under half a billion dollars of debt on the
Speaker 3: balance sheet right now, so a very clean balance sheet,
Speaker 3: over one point six billion dollars of liquidity, and the
Speaker 3: business is generating strong cash flow.
Speaker 1: And it's that cash flow when you go back.
Speaker 3: To the investment and the over a billion dollar investment
Speaker 3: back in the business. That cash flow is what we're
Speaker 3: using to invest back into the business. When I look
Speaker 3: to the future, what I see is this is going
Speaker 3: to be a business that has a mix of stores
Speaker 3: as a mix of online is generating a healthy cash
Speaker 3: flow because we're delivering what the customer needs, which right
Speaker 3: now is great product, accessible fashion at a great value,
Speaker 3: and a really rewarding shopping experience.
Speaker 1: Well Mark, just.
Speaker 2: To follow up on that point again, you look far
Speaker 2: in the future, five years down the line, and I
Speaker 2: hear what you say on there being a lot of
Speaker 2: milestones to hit, but could we see JC Penny go
Speaker 2: public again?
Speaker 3: So right now, as you mentioned, we're private right now,
Speaker 3: and that does give us the advantage of being able
Speaker 3: to invest in this transformation. And that's really important right
Speaker 3: now is to be able to take that cash invested
Speaker 3: in the transformation to really focus on the customer. And
Speaker 3: right now we're we're in what I would say is
Speaker 3: the middle of that transformation. We've did a lot in
Speaker 3: the shopping experience. I said about a third of our
Speaker 3: stores will be remodeled by the end of this year,
Speaker 3: but there's still a lot more to do in terms
Speaker 3: of stores, in the online experience and the shopping experience,
Speaker 3: and we're in the process of reinvigorating our brand.
Speaker 1: So that's what's important to us now.
Speaker 3: We're continuing to drive that cash flow, continuing to reinvest
Speaker 3: in the experience for the customer, and we'll see what
Speaker 3: the future brings.
Speaker 4: I wonder about keeping your employees engage. You know, I spend,
Speaker 4: for whatever reason, a lot of time in big box
Speaker 4: stores here in Westchester, and oftentimes employees are on break
Speaker 4: don't really care you know, messing around with products instead
Speaker 4: of customers. How do you keep them engaged? And how
Speaker 4: much more have you had to pay them over the
Speaker 4: last say, you know.
Speaker 1: Three years?
Speaker 3: Right, So for our customers, I think I joined the
Speaker 3: company about two and a half years ago.
Speaker 1: And when I did, we really united around.
Speaker 3: Our purpose, which is to serve and celebrate with America's
Speaker 3: diverse working families. And the interesting I think the really
Speaker 3: great thing for us is our employees are also America's
Speaker 3: diverse working families, and they see what we're doing for
Speaker 3: their communities and what we're doing for them, and they
Speaker 3: are engaged in the purpose of the company, in the
Speaker 3: culture of the company, and in bringing back and driving.
Speaker 1: Those results that I talked about.
Speaker 3: So that's what's really important in terms of keeping our
Speaker 3: associates engaged. We've actually over the last couple of years
Speaker 3: seen a big increase in our net Promoter score, which
Speaker 3: is how we manage how we measure customer satisfaction when
Speaker 3: customers are in our stores. And so we're really pleased
Speaker 3: with the way that our customers are staying close to
Speaker 3: the customer, engage with the customer, and making sure they
Speaker 3: have a great experience in store and part of the
Speaker 3: investment is also in technology like new point of sale
Speaker 3: technology and mobile point of sale to make sure that
Speaker 3: that customer does have a better experience every time they
Speaker 3: come into the store.
Speaker 4: Mark you place clearly a lot of importance on inclusion
Speaker 4: and diversity. You celebrate diversity events. Is that harder in
Speaker 4: today's climate? We just saw deer you have to back down.
Speaker 4: We're talking about tractor supply. You're in Dallas, Texas. Is
Speaker 4: it harder for you?
Speaker 3: What I would say is again, our customer is America's
Speaker 3: diverse working families, and our customer is a broad set
Speaker 3: that really reflects America. That is the same of our
Speaker 3: employee base. And we are really focused on respect and
Speaker 3: inclusion for all of our customer base and our employee base,
Speaker 3: and it is important to everything that we do.
Speaker 5: Mark, We thank you so much for joining us today.
Speaker 5: Best of luck to you. That is the CEO of
Speaker 5: JC Penny in the middle of a big turnaround.