JCPenney 2006 Annual Report Download - page 3

page three l J. C. Penney Company, Inc. l Annual Report 2006
DEAR JCPENNEY STOCKHOLDER:
It is gratifying to write to you about
JCPenney’s remarkable accomplishments
in 2006. Our success reflects the progress
we have made in implementing the
Long-Range Plan for growth we introduced
in 2005, and the commitment of our
Associates to fulfilling our promises to our
customers. This momentum is allowing us
to undertake new growth initiatives, all
designed to make JCPenney the leader in
performance and execution in retailing.
MESSAGE FROM
MIKE
New Private and Exclusive Brands Found Only in JCPenney: Our
customers tell us that one of the most compelling attractions of
JCPenney is our collection of private and exclusive brands, which we
believe clearly differentiate us as the lifestyle shopping destination for
style and quality at smart prices.
This customer demand led us to launch several new brands in 2006 and
early 2007, each of which is delivering a strong performance. Among
them are a.n.a — "a new approach" for the modern casual woman;
Solitude in menswear; and, Studio in our JCPenney Home Collection.
We also introduced Sephora, the most exciting retail concept in the
beauty industry, inside JCPenney stores. Based on initial sales,
Sephora’s offering is clearly inspiring our customers. We will continue to
roll out Sephora inside JCPenney stores in 2007 and beyond.
We also recently added to our merchandise mix Ambrielle, our intimate
apparel brand for the modern customer, and two new casual brands
created for us by Liz Claiborne — Liz & Co. for the traditional woman
and Concepts By Claiborne for the modern man. Early sales of these
brands suggest they are resonating extremely well with our customers.
In spring 2008, these brands will be joined by American Living, a
classic/traditional brand being created exclusively for JCPenney by
Polo Ralph Lauren’s Global Brand Concepts. This will be the largest
launch in our Company’s history, available throughout our merchandise
assortment, and will serve to further set us apart in the retail marketplace.
Accelerated New Store Openings and Rapid Expansion of Our
Industry-Leading Web Site: In 2006, we opened 28 new stores. As
we look ahead, we believe there are more than 400 additional locations
for new JCPenney stores, and we plan to open 250 new stores in the
next five years.
The majority of these new stores will be in our highly successful off-mall
format, which allows us to enter communities that do not have malls,
but where there is significant demand for our destination national
brands as well as our great private and exclusive brands. Many of these
communities are new or expanding based on population shifts, and we
are delighted to be able to quickly establish a presence and serve this
growing customer base.
The expansion of JCPenney is a key element of our focus on being an
easy and exciting place to shop, and we are dedicated to ensuring our
existing store base reflects the best elements of our new store format.
In the past five years, we have renovated 150 stores and plan to
complete 65 more in the current year. In total, we have earmarked $1.2
billion for capital investments in 2007, primarily for new stores and
renovations of existing stores.
GROWTH INITIATIVES: