2007 Analyst Meeting Exhibit 99.1 |
Michael Dastugue Senior Vice President Property Development Growth Leadership |
2006-2007 Openings 2007 Store Openings 2006 Store Openings (28) (50) |
2003-2007 Openings (6) (14) (18) (28) (50) 2007 Store Openings 2006 Store Openings 2005 Store Openings 2004 Store Openings 2003 Store Openings |
2006-2007 Renovations 2007 Renovations 2006 Renovations (48) (65) |
Best-in-Class Team Real Estate Real Estate Area Research Area Research Store Environment Store Environment Construction Services Construction Services |
Best-in-Class Process • Streamlined • Disciplined • Methodical • Consistent Delivery |
• Enhance our store portfolio • Existing store renovations • Evolution of the off-mall format • Grow our store base • New store openings The Retail Growth Leader |
Enhance Store Portfolio Through Renovations • Goal: New store “look & feel” • Lighting • Carpet & Tile • Paint • Restrooms & Fitting Rooms • Fixtures • Layout & Adjacencies |
SEPHORA SEPHORA WOMEN’S WOMEN’S ’S S WOMEN’S WOMEN’S ’S S FOOTWEAR FOOTWEAR CHILDREN’S CHILDREN’S ’S S FINE FINE JEWELRY JEWELRY HOME HOME MEN’S MEN’S ’S S INTIMATE INTIMATE APPAREL APPAREL |
Renovation Plan • Complete 300 (2007-2011) • 65 approved for 2007 • Improve store condition • Currently: 45% new/renovated • Goal: 80% by end of 2011 90% of sales/operating profit |
Renovation Performance • Stores renovated 2003-2005 exceeded profit plan by 21% in 2006 • Components paying off & resonating with customers |
Prioritizing Capital Spending • jTest • Statistically valid testing model • Objective analysis of impact • Helps prioritize resources |
• Enhance our store portfolio • Existing store renovations • Evolution of the off-mall format • Grow our store base • New store openings The Retail Growth Leader |
Grow Store Base 116 400 800 1200 2007 Existing Stores New Stores (cumulative total) |
• 250 new stores (2007-2011) • 175 new / 75 relocations • 80%-90% off-mall • 18% square footage growth • 1,200 stores by 2011 Grow Store Base |
2007 Store Openings |
Location Strategy • Large size markets • Multi-store • Trade area population 200-300k • Mid-size markets • Primarily single-store • Trade area population 100-300k |
Location Strategy Top 20 Market |
Location Strategy Mall • Core strength • Opportunistic acquisitions • Weekend / Holiday Off-Mall • Future growth • New customers • Frequent visits • Weekday |
NatickNatickNatick NatickNatick NatickNatickNatick Natick Santa AnaSanta Ana Santa AnaSanta Ana Santa AnaSanta Ana Santa Ana Santa Ana Santa Ana Opportunistic Acquisitions |
“First Mover” |
New Store Success • Strong financial performance • Attracting new customers • Creating more frequent trips • Capturing greater wallet share • Smaller trade areas required • Less transfer sales |
• 2007: • 50 new stores • 65 renovations • 2007-2011: • 250 new stores • 300 renovations • Off-mall format evolution Key Takeaways |
2007 Analyst Meeting |
2007 Analyst Meeting |
Clarence Kelley Executive Vice President Planning & Allocation Improving Merchandise Relevancy |
JCPENNEY MERCHANDISING PROCESS |
JCPENNEY MERCHANDISING PROCESS |
Right Size Right Size Right Product Right Product Right Quantity Right Quantity Right Store Right Store Right Time Right Time The 5 R’s Strategic Inventory Flow |
What A Difference A Year Makes • Sales • Avg. Unit Inventory • Unit Turn • Gross Profit +6.5% -3.0% +8.0% +11.2% |
Store Trending Item Trending Initial Allocations Merchandise Flowback Pre-Season Financial Planning Pre-Season Merchandise Planning In-Season Execution Before Season Before Season Before Season 12+ Months 9 Months Item Planning Purchase Order Creation Conceptual Plan (Fabric Forecast) <9 Months 1 Month <1 Month In-Season Merchandise Planning Store Planning & Grading Strategic Intent Assortment Planning & Size Profiling Strategic Flow Planning |
• Merchandise Planning • Store Planning • Store Grading • Purchase Orders • Basics Replenishment • Fashion Allocation Assortment Planning • Flow Planning • Size Profiling • Conceptual Planning Assortment Planning System Integration |
• Merchandise Planning • Store Planning • Purchase Orders • Basics Replenishment • Fashion Allocation Assortment Planning • Flow Planning • Size Profiling • Conceptual Planning Assortment Planning System Integration Store Grading |
Volume Grouping (Illustrative Department Grouping) 2 9 20 41 64 102 221 307 183 61 21 8 # Stores 1,061 594 12 1,550 1,062 11 2,020 1,551 10 2,993 2,021 9 5,030 2,994 8 8,452 5,031 7 14,201 8,453 6 23,859 14,202 5 40,085 23,860 4 67,344 40,086 3 113,139 67,345 2 190,076 113,140 1 Max Sales $ Min Sales $ Grade |
Store Grading • Assortments Adapted For Each Store Group • Floor Set Plan Development • Initial Allocation Structure • Balanced to Financial Plan |
• Merchandise Planning • Store Planning • Store Grading • Purchase Orders • Basics Replenishment • Fashion Allocation Assortment Planning • Size Profiling • Conceptual Planning Assortment Planning System Integration Flow Planning Flow Planning Flow Planning |
Flow Planning |
Flow Planning • Just In Time Store Receipts • Reduced Inventory Handling • Alleviates Stockroom Crowding • Supply Chain Efficiency • Ability to React to Sales • Increased Gross Margin • Improved Operating Profit |
• Merchandise Planning • Store Planning • Store Grading • Purchase Orders • Basics Replenishment • Fashion Allocation Assortment Planning • Flow Planning Planning Assortment Planning System Integration Size Profiling |
Size Profiling Pack Optimization 6 4 2 0 2 4 4 2 0 3 5 4 Recommended Pack Configuration XL High L High M High S High XL Norm L Norm M Norm S Norm XL Low L Low M Low S Low Size Store Emphasis Size Range: S-XL Product Type: Tops Store: All Stores Pack Qty: 12 147 High 790 Norm 96 Low Number of Stores |
Size Profiling Open Stock 1 0.2 11 Norm 28 4.7 10 Norm 32 5.3 9 ½ Norm 63 10.5 9 Norm 90 15.0 8 ½ Norm 120 19.9 8 Norm 101 16.8 7 ½ Norm 69 11.5 7 Norm 53 8.8 6 ½ Norm 41 6.8 6 Norm 3 0.5 5 ½ Norm 1 0.2 5 Norm Sales Units Recommended Weight Size Store Emphasis Size Range: 5-10,11 Product Type: Shoes Store: 0899 |
• Merchandise Planning • Store Planning • Store Grading • Purchase Orders • Fashion Allocation Assortment Planning • Size Profiling • Flow Planning • Conceptual Planning Assortment Planning System Integration Basics Replenishment Basics Replenishment |
Purchase Order Basics Replenishment |
Basics Replenishment • Reduced Warehouse Expenses • Improved Inventory Turn • Gross Margin Increase |
Basics Replenishment |
• Merchandise Planning • Store Planning • Store Grading • Purchase Orders • Basics Replenishment Assortment Planning • Size Profiling • Flow Planning • Conceptual Planning Assortment Planning System Integration Fashion Allocation Fashion Allocation |
Fashion Allocation |
Store Trending Item Trending Initial Allocations Merchandise Flowback Pre-Season Financial Planning Pre-Season Merchandise Planning In-Season Execution Before Season Before Season Before Season 12+ Months 9 Months Item Planning Purchase Order Creation Conceptual Plan (Fabric Forecast) <9 Months 1 Month <1 Month In-Season Merchandise Planning Store Planning & Grading Strategic Intent Assortment Planning & Size Profiling In-Season |
Flow Strategy Success • Increased Sales • Customer Satisfaction • Shorter Product Cycle • Improved Sell Through Rate • Reduced Markdowns • Increased Inventory Productivity • Increased Profits |
2007 Analyst Meeting |
Peter McGrath Executive Vice President Product Development & Sourcing Improving Merchandise Relevancy |
What is CTR? What is CTR? Concept Concept Customer Customer |
• Supplier • Mill • Factory • Execution Options • Buyer • Brand Manager • Product Development Manager • Sourcing Manager SOURCING |
Benefits of CTR • Fashion decisions made in quick response to customer demand • Ability to react in-season |
Benefits of CTR • Fashion decisions made in quick response to customer demand • Ability to react in-season • Improved flow of merchandise • Turnover improvement • Markdown improvement • Gross Profit improvement |
Month -6 -5 -4 -3 -1 -2 0 -7 -8 -9 -10 -12 -11 -13 On floor Trend & color Design & sampling Buy Production 2005 Process Ship Domestic logistics Product Development Calendar Where we started . . . |
Where we are today . . . Where we are today . . . Month -6 -5 -4 -3 -1 -2 0 -7 -8 -9 -10 -12 -11 -13 On floor Product Development Calendar Core/ Essentials Calendar Fashion Targeted Spring 2008 |
• Established a full-time CTR team • Re-engineered business processes CTR: Progress to Date |
CTR: Progress to Date 4 Star Certification Quality Quality Inspections Inspections Digital Color Digital Color Approvals Approvals Product Product Performance Performance Testing Testing Fit Fit Evaluations Evaluations |
CTR: Progress to Date • Piloted 30-week calendar with a.n.a and Arizona kids • Implemented 40-week calendar for ALL private brands • Trained over 400 associates across the organization |
1. 60% reduction in color development time KEY CTR CHANGES |
1. 60% reduction in color development time 2. Shifted activities overseas closer to production KEY CTR CHANGES |
1. 60% reduction in color development time 2. Shifted activities overseas closer to production 3. Implemented pre-planning KEY CTR CHANGES |
1. 60% reduction in color development time 2. Shifted activities overseas closer to production 3. Implemented pre-planning 4. Executed raw material positions with key fabric mills KEY CTR CHANGES |
Okie Dokie Knit Product |
1. 60% reduction in color development time 2. Shifted activities overseas closer to production 3. Implemented pre-planning 4. Executed raw material positions with key fabric mills 5. Execute product flow programs with key suppliers for fashion items KEY CTR CHANGES |
ONCE & DONE ONCE & DONE ONCE & DONE Factory STORE FASHION FASHION |
ONCE & ONCE & DONE DONE STAGE & FLOW STAGE & FLOW (Hold Back) (Hold Back) JCP Warehouse Supplier STORE FINISHED FINISHED GOODS GOODS |
ONCE & ONCE & DONE DONE REACT to SIZE REACT to SIZE REACT to SIZE STAGE & FLOW STAGE & FLOW Factory STORE FINISHED FINISHED FABRIC FABRIC |
SIZE & COLOR SIZE & COLOR ONCE & DONE ONCE & ONCE & DONE DONE STAGE & FLOW STAGE & FLOW REACT to SIZE REACT to SIZE REACT to SIZE Factory STORE GREIGE GREIGE GOODS GOODS |
STAGE & FLOW STAGE & FLOW SIZE & COLOR SIZE & COLOR Warehouse Replenishment Warehouse Replenishment ONCE & DONE ONCE & ONCE & DONE DONE REACT to SIZE REACT to SIZE REACT to SIZE Factory Warehouse AUTOMATIC AUTOMATIC PULL PULL |
CTR CTR Makes Makes Strategic Strategic Flow Flow a a Reality Reality STAGE & FLOW STAGE & FLOW ONCE & DONE ONCE & ONCE & DONE DONE REACT to SIZE REACT to SIZE REACT to SIZE SIZE & COLOR SIZE & COLOR WAREHOUSE REPLENISHMENT WAREHOUSE REPLENISHMENT WAREHOUSE REPLENISHMENT |
Where We are Going: Taking Speed To A New Level |
CTR Taking Speed To A New Level 1. Product Lifecycle Management • Increase speed • Create and cost product more efficiently • Further integrate our global suppliers |
1. Product Lifecycle Management 2. Hub and Spoke Environment • Leverage vertical manufacturing • Reduce transport time and cost CTR Taking Speed To A New Level |
1. Product Lifecycle Management 2. Hub and Spoke Environment 3. Continuous R&D and Training • Product innovation • Process discipline CTR Taking Speed To A New Level |
1. Product Lifecycle Management 2. Hub and Spoke Environment 3. Continuous R&D and Training 4. Migrate Activities Overseas • Certify additional suppliers • Further reduce downtime CTR Taking Speed To A New Level |
is a by product of |
Right Size Right Size Right Product Right Product Right Quantity Right Quantity Right Store Right Store Right Time Right Time The 5 R’s Strategic Inventory Flow |
2007 Analyst Meeting |
2007 Analyst Meeting |
Mike Theilmann Executive Vice President Chief Human Resources & Administration Officer Become the Preferred Choice for a Retail Career |
Become the Preferred Choice for a Retail Career |
• Associate Engagement • Talent Retention and Acquisition • Leadership Development • Corporate Social Responsibility WINNING with: |
WINNING with Associate Engagement |
Measuring Associate Engagement |
WINNING TOGETHER Survey Results: 50 60 70 80 90 100 Participation Engagement 2005 2006 20pts 7pts |
0 20 40 60 80 100 Benefits Plans Improvements 2005 2006 11pts WINNING TOGETHER Survey Results: |
Engaged Associates Grow the Business |
Engaged Associates Build Customer Relationships |
Retail Industry Leader in Training |
jPOS |
jPOS |
jLearn |
“Science of Sephora” |
“Science of Sephora” |
Bra Fit Certification Plaques |
Shoes Furniture Fine Jewelry Window Coverings Men’s Clothing |
WINNING with Talent Retention & Acquisition |
WINNING with Talent Retention |
WINNING with Talent Retention: Turning “jobs into careers” |
WINNING with Talent Acquisition |
WINNING with Talent Acquisition: Hiring The Best Talent In The Industry |
Power Brands |
Designers In Training |
Designers In Training |
WINNING with Leadership Development |
WINNING TOGETHER Leading Together |
WINNING TOGETHER Leading a Store |
WINNING TOGETHER Leading a District |
Queens, NY |
Queens, NY |
WINNING through Corporate Social Responsibility |
2007 Analyst Meeting |
2007 Analyst Meeting |
Mike Ullman Chairman and Chief Executive Officer 2007 – 2011 Long Range Plan Accelerated Growth . . . Industry Leadership . . . |
• Every Day Matters. . . Inspiring Customers • American Living • Sephora inside JCPenney • 8 JCP Power Brands • Merchandise Flow Strategy • jcp.com Leadership • New Store Growth . . . 250 New Stores • Investing in Existing Stores • Best Talent in Retail • 16% EPS CAGR Key Differentiators: |
2007 Analyst Meeting |
JCPENNEY MERCHANDISING PROCESS
MERCHANDISE PLANNING | PRODUCT DEVELOPMENT | SOURCING | SUPPLY CHAIN | ALLOCATION | SELLING | |||||
• Consumer Research
• Assortment Strategy • Brand • Trend • Sourcing
• Planning Variables • Concept • Merchandise Mix • Item Planning • Assortment • Store Grading • Price / Promotion • Frequency / Flow • Size Profile | • Color
• Fabric
• Product | • Supplier
• Mill
• Factory
• Execution Options | • Consolidation
• Transportation
• Distribution
• Replenishment Options | • Initial Allocation
• Basic Replenishment
• Fashion Allocation
• Post Receipt Alternatives | • Store Environment
• Merchandise Presentation
• Promotion
• Customer Interface | |||||
• GMM / DMM / Buyer | • Buyer | • Buyer | • Supply Chain Manager | • Buyer | • Buyer | |||||
• Brand Manager | • Brand Manager | • Brand Manager | • Allocator | • Store Associate | ||||||
• Sourcing Director | • Product Development Manager | • Product Development Manager | • Supply Chain Manager | • Store Operations | ||||||
• Planner | • Designer | • Sourcing Manager | • Planner | • Marketing Manager | ||||||
• Trend Director | ||||||||||
• Business Development Manager |
MERCHANDISE ACTION TEAM (MAT)
BRAND MANAGER
Cross Functional Brand Execution | PLANNER
Develop Unit / Dollar Conceptual & Assortment Plan | DESIGNER
Creates the Design and Development of Product | ||
MERCHANDISE STANDARDS & EXECUTION MANAGER
Execution of Division / Merchandise Standards in Stores | BUYER
(Leads “MAT” Team)
Plans, Purchase, Controls Merchandising | PRODUCT DEVELOPMENT MANAGER
Business Manager of Product Execution | ||
SUPPLY CHAIN MANAGER
Manages the Flow of Goods | ALLOCATOR
Merchandise Allocation | SOURCING MANAGER
Global Sourcing and Costing |
JCPENNEY COMPETITIVE ADVANTAGES
• Top Talent • Leading Technology • Store Planning • End-to-End Process • Sourcing Strength