Macy’s, Inc. (M), J.C. Penney Company, Inc. (JCP): Is Joe Fresh Already Going Stale for J.C. Penney?

Page 1 of 2

On March 15, J.C. Penney Company, Inc. (NYSE:JCP) opened its highly anticipated Joe Fresh shops in nearly 700 stores. J.C. Penney executives hope that Joe Fresh, a popular Canadian apparel brand, will bring new customers into their stores. Retail analysts suggested that the launch was fairly successful in terms of customer interest and traffic. However, based on my own store checks, traffic appears to have dropped off quickly. There is little reason to believe that the Joe Fresh brand will help turn around J.C. Penney’s awful sales performance anytime soon.

First-weekend success

Joe Fresh is one of the most important components of J.C. Penney Company, Inc. (NYSE:JCP)’s new “shops” strategy, so Penney heavily promoted the brand’s launch. The new line went on sale online last month, and was featured heavily in J.C. Penney’s commercials during the Oscars. It quickly became the top brand on Penney’s website, with seven times more visitors than Liz Claiborne, the No. 2 brand. Moreover, most of the customers buying Joe Fresh merchandise in the first few days after the online launch had not previously shopped through J.C. Penney’s website.

J.C. Penney Company, Inc. (NYSE:JCP) hoped to generate a similarly impressive first-weekend performance in stores, and offered a coupon for $10 off a $50 purchase to drive traffic to its stores. Deutsche Bank analyst Paul Trussell stated that this coupon offer led to a solid opening weekend for Joe Fresh, with sales increasing over the course of the weekend. Trussell believes that the launch was stronger in markets like New York and California, rather than J.C. Penney’s traditional bastion in middle America.

Analysts at Oppenheimer visited several stores in New York and New Jersey over the weekend, and were also generally upbeat about the new Joe Fresh shops. “Traffic is difficult to measure, but customers do seem to be reacting positively to the Joe Fresh launch,” they wrote. The analysts also opined that the price range for the Joe Fresh collection (most items are less than $40) would appeal to the core J.C. Penney customer.

Follow-through?
While retail analysts seem relatively pleased with Joe Fresh’s opening weekend, this may be the result of low expectations stemming from J.C. Penney Company, Inc. (NYSE:JCP)’s extremely weak performance in the past year. I visited three J.C. Penney stores (also in New York and New Jersey) on Tuesday in order to gauge traffic and interest in the Joe Fresh shops. I also visited Macy’s, Inc. (NYSE:M) stores in the same malls to create a baseline for comparison, since Tuesday would typically be a light traffic day. In each mall I visited, Macy’s was noticeably busier than J.C. Penney: in two of the three cases, dramatically so. Whereas a few sections of each J.C. Penney might be busy, with the rest of the store feeling deserted, the Macy’s, Inc. (NYSE:M) stores had strong traffic throughout (for a Tuesday).

Joe Fresh was not a strong performer in terms of traffic or customer interest in the three J.C. Penney Company, Inc. (NYSE:JCP)stores I visited. In the first store, I checked the Joe Fresh section three times (at 10-minute intervals) and did not see any customers. In the second store I visited, I saw one customer in the Joe Fresh section. At the third location (which was the busiest of the J.C. Penney stores), I saw two people in the Joe Fresh shop when I walked into the store, but the section was empty 10 minutes later. Each Joe Fresh shop appeared to have plenty of inventory, but it was not clear if that was due to high initial orders, weak sales, or both.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!