JCPenney 2008 Annual Report Download - page 18

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Moderate
Managing Expenses
Regardless of the economic environment, we constantly review our
organizational effectiveness and efciencies. To that end, we are
managing expenses to be aligned with our adjusted sales
expectations, and are focused on expense control and identifying
opportunities for savings. SG&A expense control has been
an area of strength for us. For the last three years, total
operating expenses, exclusive of pension expense, have been
essentially at and are expected to remain at in 2009.
Additionally, our jTime workforce management tool has allowed us
to achieve signicant savings in store payroll by better matching
store stafng with anticipated customer trafc. We have been able to
accomplish reductions by prudently cutting expenses while, at the
same time, making continued improvements in our customers’
shopping experiences.
Inventory Management
As a result of Company investments in new technology for
planning and allocation, as well as in our outstanding fulllment
and distribution network, we have the tools and talent in place to
appropriately manage inventory levels to be in line with expected
sales trends. Our technology and merchandise ow initiatives,
including cycle time reduction, provide better visibility into our
business, and allow us to make more rapid adjustments to
changing circumstances.
Capital Investment
Reducing capital spending, in line with actual and anticipated sales trends, reects the best use of
our resources to further enhance cash ow, and ensure we are well-positioned to take market share
when the environment improves. Capital expenditures in 2008 were $969 million, and for 2009, have
been lowered to approximately $600 million, including a reduced store opening and renovation plan.
The majority of capital expenditures for 2008 and 2009 are allocated for new stores and renovations.
JCPenney opened 35 new stores in 2008, and will open 17 new stores in 2009. Additionally, in 2008,
we completed signicant xturing and store environment improvements in approximately 600 stores,
as well as 24 major renovations and 90 store refurbishments.
JCPenney Takes Manhattan
One of the busiest and best retail crossroads in America, 33rd Street
and 6th Avenue, will be home to the JCPenney store in Manhattan,
opening in the summer of 2009. The 150,000-square-foot, three-level
store in the Manhattan Mall will benet from bustling street-level
trafc, as well as below-ground entrances from one of the city’s busiest
subway lines. We expect the store’s productivity to be signicantly
higher than a typical JCPenney store, and we look forward to
showcasing our value proposition of style, quality and smart prices to
millions of potential customers.
JCPenney is focused on balancing long-term growth opportunities with the near-term pressures of the consumer environment. Our strong
nancial position allows us to concentrate on appropriately managing inventory levels, operating expenses and capital expenditures without
the need for substantial changes to our business model. This exibility keeps us in a strong competitive position, relative to our mall-based
competitors, and gives us the ability to navigate the challenges of the current economic downturn.
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