J.C. Penney posted strong numbers for the fourth quarter and all of 2015, citing its omnichannel initiatives as part of the reason for its continuing renaissance, doing well in a holiday season when competitors including Macy’s, Kohl’s and Sears saw poor results.
For the quarter, the company’s net sales increased 2.6%, from $3.9 billion to $4 billion; annual sales grew 3%, from $12.3 billion to $12.6 billion. Same-store sales – a bit of a challenge for Target in its Q4 results – were up 4.1%, and the company called for an increase in the range of 3%-4% in comps for this year.
“Our performance clearly indicates that our commitment to reducing expenses, while driving our strategic framework of private brands and omnichannel revenue per customer, is paying off,” CEO Marvin R. Ellison told analysts. “For the full year, we met or exceeded all components of our guidance and delivered 155% increase in adjusted EBITDA.”
Ellison, brought in from Home Depot in 2014 to replace Myron Ullman, who began the turnaround after the disastrous tenure of Ron Johnson, has made popular private brands a hallmark of J.C. Penney – something Johnson had tried to ditch. Ellison also made a bold move in January to reintroduce appliances at the chain, after customers said they were the number-one item they searched for and couldn’t find, going head-to-head in the category with Sears.
The CEO said J.C. Penney’s omnichannel capabilities allow it to share inventory between stores and ecommerce, providing seamless connections with customers “how and when and where she wants to shop. These new capabilities allowed us to deliver record holiday online sales in the fourth quarter and we’ll continue to have plenty of upside to grow.”
In the recent strong quarter, Ellison said in-store pickup is becoming a popular option for J.C. Penney customers, a cost-saving tactic compared to ship from store as well as a sales driver.
“This is great because it drives traffic in the stores and it allows our excellent store associates the opportunity to engage customers and attach an additional sale,” he said.
In the fourth quarter, J.C. Penney began testing same-day order picking at about 10% of its U.S. stores. Ellison said the “attach rate,” or rate of secondary sales resulting from the pickup visit, was a healthy 35%. He added the company plans to roll out in-store pickup chain-wide before the back-to-school selling season.
As omnichannel shoppers are generally heavy users of mobile, Ellison said mobile traffic increased 25% in the fourth quarter, with the conversion rate up to nearly 60%.