Don’t call J.C. Penney’s ongoing plans for its catalog division downsizing. Instead, think of it as editing.
“We’re editing the merchandise for a customer who really likes to shop direct,” says spokesperson Rita Trevino Flynn. “Before, the catalog contained whatever was in the stores. But you can’t sustain rapid changes in fashion, because catalogs are out there for six months while some fashions, such as juniors, change as rapidly as every nine days.”
In addition to eliminating junior apparel from its “big books” during the past year, $18.2 billion Penney has also deleted children’s underwear, wallpaper, and wall borders from the core catalogs. The page count for Penney’s holiday catalog fell from 600 pages in 2001 to 532 last year.
Further, the Plano, TX-based general merchant has been cutting circulation and specialty titles since 1999 and will continue this year. Overall catalog circulation, which dropped from 15.6 million in 2001 to 14 million last year, will most likely decrease more this year, Flynn says.
And whereas Penney produced 38 specialty titles, such as tall women’s and petite apparel, in 2000, last year it put out just 28. It will eliminate additional books this year, Flynn says, although the company hasn’t decided which ones will be cut.
On the plus side, Penney is adding more upscale home decor items and fashionable women’s apparel items to its core catalog. Average price points, however, aren’t changing.
The changes are “aimed at generating more profitable sales for the company,” says spokesperson Tim Lyons. “We’ll continue to edit our merchandise assortments and focus on the best-sellers and most profitable lines in the catalog. At the same time, we’re tightening our catalog inventory controls by editing our catalog offerings more and keeping more best-sellers.”
The edits have extended to its head count in Penney’s direct division. In January it announced the closure of its Atlanta fulfillment center and its Atlanta and Lenexa, KS, call centers. About 2,000 workers will be laid off, although 500-700 will be rehired to handle Penney’s restructured central store distribution in the Atlanta warehouse.
The cuts in circulation and catalog pages have caused the direct division’s revenue to drop. Catalog/Internet sales fell from $4.17 billion in 2000 to $3.35 billion in 2001. At press time the company hadn’t yet announced sales for fiscal 2002.
But Penney’s bottom line is looking better. Operating profit for its third quarter ended Oct. 26 increased 15%, or 50 basis points, to $170 million, compared to $148 million for the same period in 2001. Penney also reported at the time that although third-quarter catalog sales had fallen 21.2%, catalog profitability was up.