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The $19.86 billion chain is reducing store openings to 36, from 50, leading to a savings of $200 million in capital expenditures, Myron "Mike" Ullman 3rd, chairman and chief executive officer, said Tuesday during a dinner speech at the company's annual analysts' presentation at the Mandarin Hotel here. There will be 20 major store renovations, down from the 65 originally planned, and the retailer is "moderating" the inventory buy, which is generally purchased four to nine months ahead of the selling season, Ullman said.
However, Penney's is accelerating product innovation, which, along with the capital expenditure savings, are key components of a "bridge plan" to get back on its "trajectory to accomplish long-range goals," Ullman said.
Experiences with recent higher-priced private label or exclusive offerings, notably Ambrielle Lingerie and Sephora, have encouraged the retailer to "enhance the brand attributes of Penney's power brands," he said. With the Worthington and Stafford private labels, "we are currently working on brand enhancements."
During the two-day presentation to analysts, which included a tour of the 133,000-square-foot, three-level store in Garden State Plaza in Paramus, N.J., executives discussed several initiatives in private brands, which account for 45 percent of the business. Among them:
l Xersion, a private label and the focal point for a new women's active department, will launch in 600 stores this year.
l Decree launches for back-to-school. It is projected to be the chain's second largest junior brand next to Arizona.
l Kimora Lee Simmons' Fabulosity exclusive junior sportswear collection will roll out to 600 doors for b-t-s. Simmons' reality show, "Life in the Fab Lane," will feature the making of the collection in a June episode.
l The a.n.a. modern casual women's brand will expand to petites and women's sizes this spring, and Ambrielle will expand with plus sizes.
l Stafford, the private brand for the traditional male customer, this fall will introduce a business casual line.
Although retailers ranging from AnnTaylor Stores Corp. to Zale Corp. are aggressively closing stores, Ullman said, "We don't see a major opportunity there." During Penney's turnaround years, the retailer closed more than 100 stores. "We currently don't have stores that are not cash-flow positive," Ullman said. Scaling back openings "doesn't mean we are not committed to new stores. The new store opening program is essential." Penney's opened 85 off-the-mall units last year.