updated 4/16/2008 8:33:15 PM ET 2008-04-17T00:33:15

Reacting to the economic slowdown, JC. Penney Co. will open fewer new stores this year than originally planned while stepping up its efforts to attract frugal shoppers away from rivals with new brands and marketing pitches.

Penney officials told analysts at its annual investors' meeting on Wednesday that the goal is to balance the current economic environment with the company's long-term vision.

The Plano, Tex.-based department store chain plans to open 36 new stores this year instead of the 50 it had projected. It also aims to renovate 20 units this year, instead of the planned 65. Executives are reviewing reductions in Penny's store growth plan for 2009 but won't make any decisions until July.

Given the economic uncertainty, "we need to inspire customers to shop more with us and not the competition," said Ken Hicks, president of J.C. Penney. He told investors that the company is "keeping a laser focus on the customers and on their wants and needs."

Penney this week announced several new lines for teens, along with the launch of a new store brand of home furnishings and accessories called Linden Street. It also said that it is expanding its store label lingerie brand called Ambrielle to include large sizes and is adding a collection of business casual offerings to its Stafford's men's clothing collection.

Penney executives said that the American Living brand — which marks the biggest launch in the company's history — will be expanded to outerwear and the young men's category later this year. The collection, whose offerings span from home furnishings to luggage, has met sales expectations, according to Myron "Mike" Ullman, chairman and CEO of Penney.

To improve store traffic, Penney is sharpening its price message. Mark Boylson, chief marketing officer, said that shoppers come to Penney for specific occasions like the back-to-school or for the holiday season but the challenge "is to drive traffic during the non-peak sales period." Penney is also reducing the production cycle time of a garment — from concept to store delivery — to better match orders to customer demand and to respond better to the fashion trends it's seeing.

The comments come as Penney and other retailers have stumbled in the face of a consumer spending slowdown brought on by higher gasoline prices, slumping home prices and a drop in consumer confidence. Penney slashed its first-quarter profit outlook last month, and last week the retailer reported a larger-than-expected 12.3 percent drop in same-store sales, or sales at stores open at least a year, for March.

The cautious approach was different from the path outlined at the investor session only a year ago, when the company said it planned to open 250 new stores over the next five years and predicted its earnings per share would grow at a 16 percent compound annual rate from 2008 to 2011. The company said Wednesday that it would not offer an annual earnings forecast because of the overall economic uncertainty, but Bob Cavanaugh, chief financial officer, said that gross profit margins will be under pressure due to the weaker sales, particularly in the first half of the year.

Ullman told investors on Tuesday, the first day of the two-day conference, that what is most challenging about this economic downturn compared with past slowdowns is that it has been so "unpredictable." Consumers, he said, are faced with much uncertainty in the housing market as well as volatility in the financial markets.

"We think it's going to take awhile before it gets predictable," Ullman said.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%
Source: Bankrate.com