J. C. Penney Company, Inc. (NYSE: JCP) is a chain of American mid-range department stores based in Plano, Texas, a suburb north of Dallas. The company operates 1,107 department stores in all 50 U.S. states[2] and Puerto Rico.[3] jcpenney also operates catalog sales merchant offices nationwide in many small markets.
Most jcpenney stores are located in suburban shopping malls. Previously, most stores were located in downtown areas. As shopping malls became more popular in the latter half of the 20th century, jcpenney followed the trend by relocating its stores to anchor the malls. In more recent years, the chain has continued to follow consumer traffic, echoing the retailing trend of opening some standalone stores, including some next door to competitors. Certain stores are located in power centers and can be considered big-box stores. The company has been an Internet retailer since 1998. It has streamlined its catalog and distribution while undergoing renovation improvements at store level.
In addition to selling conventional merchandise, jcpenney stores often house several leased departments such as Sephora, optical, portrait studios and jewelry & watch repair. jcpenney also features discount outlet stores. Some of these were converted from regular jcpenney stores.
In 2010, Google retaliated against jcpenney for a search engine link scheme which successfully promoted the jcpenney Web site in its search results for many months, especially during the holiday season. It was described by an expert as "the most ambitious attempt to game Google's search results that he has ever seen." Although jcpenney denied any involvement, it fired its search engine consulting firm, SearchDex.

J. C. Penney Company, Inc. (JCPenney), incorporated in 2002, is a holding company whose principal operating subsidiary is J. C. Penney Corporation, Inc. (JCP). The Company is a retailer, operating 1,108 JCPenney department stores in 49 states and Puerto Rico as of January 30, 2010. Its business consists of selling merchandise and services to consumers through its department stores and Direct (Internet/catalog) channels. JCPenney sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products through Sephora inside JCPenney and home furnishings. In addition, its department stores provide with services, such as styling salon, optical, portrait photography and custom decorating.
The Company has a diversified supplier base, both domestic and foreign. It purchases merchandise from over 3,500 domestic and foreign suppliers. As of January 30, 2010, JCPenney operated 1,108 department stores throughout the United States, Alaska and Puerto Rico, of which 416 were owned, including 119 stores located on ground leases. Its distribution network included 13 merchandise distribution centers, five regional warehouses and four direct fulfillment centers. It also operated 19 direct outlet stores totaling approximately 2 million square feet.
JCPenney offers an array of national and private brands. Its merchandise and services include family apparel, home furnishing, fine jewelry, footwear, accessories and beauty. In addition, as a full-service department store, JCPenney features an array of convenient services including salon, optical, portrait, custom decorating and gift registry. Sephora shops are located inside the JCPenney stores featuring signature Sephora look, which has brands in makeup, skincare, fragrance and accessory products, such as Bare Escentuals and Philosophy. JCPenney optical provides in-store and online services to its customers for all their optical needs. JCPenney portrait studios provide professional portraits for all occasions, including newborn, birthday, holiday, graduation, engagement, adult and family portraits, passport photos and portrait greeting cards.

In 1986 JCPenney acquired Units, a chain of stores selling contemporary knitwear and by the next year the company was well on its way to achieving the goals it set forth in 1982. Moving its corporate headquarters to just outside Dallas, Texas, JCPenney was able to cut $60 million from its annual budget although about 1,250 New Yorkers lost their jobs. JCPenney's president, David Miller, added vice chairman and COO to his titles, and the company began focusing on four major merchandising groups by dividing them into separate business divisions: women's, men's, children's, and home and leisure. By the end of 1986, there were 1,482 JCPenney stores dotting the country, about to undergo a major change. In 1987 the company discontinued sales of home electronics, hard sporting goods, and photo equipment in its stores. The space that became available was then used for women's apparel. Also in the late 1980s, JCPenney opened freestanding furniture stores, called Portfolio, on an experimental basis.
The company's five regional operations were narrowed to four in 1988 to make communication between merchandising divisions and stores easier. The company also launched a massive leveraged employee stock ownership plan (LESOP) in 1988. With its new stance as a national department store focusing on apparel, the company had benefitted from its prime regional shopping center space, the most such space of all U.S. retailers. Shoppers at regional malls were there to buy clothes and accessories, not washing machines and paint, and JCPenney was poised to take better advantage of these spending habits. Earnings rebounded as a result, rising from $4.11 per share in 1987 to $5.92 in 1988 from total sales of $14.8 billion.
In 1989 JCPenney was named the U.S.'s exclusive distributor for Olympic apparel, sold its JCPenney Casualty Insurance Company, and debuted the JCPenney Television Shopping Channel. The company was not, however, immune to the intense competition and promotional atmosphere of late 1989 and early 1990, and earnings slipped slightly to $5.86 per share on sales of $16.1 billion in 1989. In 1990 Miller retired and vice chairman Gill took on the former's responsibilities as COO of JCPenney stores and catalog service. The company also broke ground for its new corporate headquarters in Plano, Texas, just north of Dallas; winnowed its stores down to 1,328 by closing underperforming outlets; and moved away from some of its private labels, focusing instead on major brand names like Haggar, Healthtex, Jockey, Levi Strauss & Company, Maidenform, Ocean Pacific, Oshkosh, Reebok, Van Heusen, and Warner's. Earnings for 1990 fell to $4.33 per share from overall revenue of nearly $17.4 billion, slowed by the uncertainty over the Persian Gulf and the coming recession.
The next year, the full brunt of the recession and the Gulf War hit consumers and JCPenney rather hard. Retail sales fell from 1990's nearly $16.4 billion to $16.2 billion, but income and per share earnings nosedived (from $577 million to $80 million and from $4.33 to .39 respectively). While the company responded to a shaky economy and adjusted its retail businesses accordingly, its insurance division far outshined other operations with a pre-tax income surge of 44 percent from 1990's $55 million to $79 million in 1991. To the relief of shareholders and management alike, JCPenney rebounded in 1992 while celebrating its 90th anniversary. After relocating to its new headquarters in Plano, the company was rewarded with replenished catalog sales; record performances from JCPenney Insurance and JCPenney National Bank; retail sales of $18 billion, and a net income hike of $777 million with an ROE leap of 18.6 percent over 1991. Further, James E. Oesterreicher was named president and Gill retired after 39 years with the company.
JCPenney's continued concentration on women--who accounted for 80 percent of apparel sales and on whose behalf each store now allocated up to 41 percent of its space--was paying off. Coupled with a "contemporary and fashion-forward environment," sales rose substantially in 1992 and 1993, due to a revitalized Worthington career collection and the debut and ongoing success of new bath and body products. Another proprietary brand, the Original Arizona Jean Company (begun in 1990), soared in earnings to $400 million from the previous year's $90 million. A hip redesign of the Plain Pockets line, Arizona quickly eclipsed JCPenney's expectations, prompting a slew of additional designs in different sizes and colors. On the heels of these triumphs came a two-for-one stock split in March 1993; a new advertising campaign reflecting the company's invigorated stance (JCPenney--Doing It Right); year-end retail sales just shy of $19 billion (up 5.4 percent); and income of $940 million (up 21 percent) due in part to stronger catalog sales of $3.5 billion (an 11 percent increase).
The next year, 1994, JCPenney was still riding the crest of its Arizona wave and introduced Little Arizona denimwear for toddlers. The continued hoopla over the brand's success had even prompted longtime rival Sears to jump into the proprietary denim fray with its own line, Canyon River Blues. Everyone, by now, from consumers to analysts, took note of JCPenney's extraordinary turnaround. Figures for 1994 further demonstrated the company's achievement, with $20.4 billion in retail sales ($800 million from Arizona brandwear), a 6.8 percent comparative store sales increase, and net income topping $1 billion. This year also found Oesterreicher promoted to vice chairman and CEO, W. Barger Tygart named president, and Howell in his 11th year as chairman.
Doing it Right, 1995 and Beyond
In 1995 JCPenney's recovery lost its momentum, falling short of both its own and analysts' expectations. Retail sales increased only 0.9 percent for the year ($20.6 billion vs. $20.4 billion), income fell from 1994's outstanding $1 billion to $838 million, and comparative store sales experienced a 1.4 percent drop. Accentuating the positive, the company announced that its Gift Registry (introduced in 1994) had already signed up 125,000 registrants (100,000 brides and 25,000 newborns) and planned to hit 250,000 by the end of 1996, while another new venture in home furnishings opened four new stores in 1995 (a Las Vegas store attracted 10,000 patrons on its first day alone) with plans for another 20 locations on the drawing board.
Yet regardless of JCPenney's retail store performance, its lesser known businesses, comprised of its drugstore chain, insurance, and banking services divisions, scored rather well for the year. Thrift Drug, the 10th largest drugstore chain in the nation with 645 stores in 12 states, had sales of nearly $1.9 billion in '95 (a 20.2 percent increase) and plans for new outlets in North Carolina and New Jersey. The Insurance group, which began reciprocal businesses services in 1990 and moved into Canada in 1992, ran up revenues of $697 million, a 22.1 percent leap from 1994's $571 million; while JCPenney National Bank's revenues grew 21.7 percent from $131 million to $160 million with 470,000 active Visa and MasterCard accounts and receivables of $823 million.
In 1996 the company moved in several directions to regain the footing lost in 1995: allocated $2.1 billion in capital expenditures over the next three years to open 100 new domestic stores and refurbish 500; expanded its international presence through varied licensing agreements; and announced plans to acquire the Eckerd drugstore chain for a combination of cash ($1.3 billion) and stock. To retain its claim as the U.S.'s largest department store, especially with old foe Sears pounding on the door, JCPenney's executives turned up the heat with more private label brands and, oddly enough, coffee. The former included Zonz, an Arizona offshoot for teens, and new additions to its menswear collection; the latter concerned a joint venture with the Coffee Group of Costa Mesa to install "JC Java" coffee bars in 800 of its stores, beginning with a handful in Orange Country, California in the fall of 1997. Although Bloomingdale's has had restaurants in their stores for decades and upstart Nordstrom had coffee bars, was the concept still new enough to attract more customers to JCPenney? Oesterreicher and his management team certainly hoped so, because after all--JCPenney was supposed to be "Doing it Right."
Principal Subsidiaries: JCPenney Collections Stores; JCPenney Home Stores; JCPenney Life Insurance Co.; JCPenney National Bank; JCPenney Specialty Stores; Thrift Drug Inc.
Principal Operating Units: JCPenney Stores; JCPenney Catalog; Thrift Drug; JCPenney Insurance; JCPenney National Bank.

OVERALL
Beta: 1.82
Market Cap (Mil.): $8,569.69
Shares Outstanding (Mil.): 229.87
Annual Dividend: 0.80
Yield (%): 2.15
FINANCIALS
JCP Industry Sector
P/E (TTM): 23.54 12.35 12.60
EPS (TTM): 50.01 -- --
ROI: 3.83 2.68 1.12
ROE: 7.38 4.45 1.87

Statistics:
Public Company
Incorporated: 1913
Employees: 205,000 (1995)
Sales: $21.4 billion (1995)
Stock Exchanges: New York Antwerp Brussels
SICs: 5311 Department Stores; 5961 Mail Order Houses

Name Age Since Current Position
Ullman, Myron 64 2004 Chairman of the Board, Chief Executive Officer
Dastugue, Michael 46 2011 Chief Financial Officer, Executive Vice President
Dhillon, Janet 48 2009 Executive Vice President, General Counsel, Secretary
Theilmann, Michael 46 2010 Group Executive Vice President
Nealon, Thomas 50 2010 Group Executive Vice President
Mangone, Ken 51 2011 Executive Vice President - Product Development, Design and Sourcing
Robben, Ed 2011 Senior Vice President, Chief Information Officer
Miller, Dennis 58 2008 Senior Vice President, Controller
Burns, M. Anthony 68 1988 Independent Director
Turner, R. Gerald 65 1995 Independent Director
Engibous, Thomas 58 1999 Independent Director
Foster, Kent 67 1998 Independent Director
Roberts, Leonard 62 2002 Independent Director
Osborne, Burl 73 2003 Independent Director
Barrett, Colleen 66 2004 Independent Director
West, Mary 48 2005 Independent Director
Teruel, Javier 60 2008 Independent Director
Laybourne, Geraldine 63 2009 Independent Director
Ackman, William 44 2011 Independent Director
Roth, Steven 69 2011 Independent Director

Address:
6501 Legacy Drive
Plano, Texas 75024-1000
U.S.A.
 
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