JCPenney 2009 Annual Report Download - page 4

our merchandising leadership structure, aligning our organization
under two seasoned JCPenney executives. Together, they and
their teams will continue to maximize our current brands and
accelerate our style authority, ensuring that we are offering the
right assortments and quantities on a market-by-market basis.
We support the work of our merchandising team by continuing
to enhance the technology platform behind every aspect of our
inventory ow. In 2009, this included rolling out Door to Floor
across our organization to improve the process of stocking
our stores in a way that drives productivity as well as higher
customer service levels. To capitalize on the renements we
made in our merchandising structure, we are continually
improving the customer experience. In 2009, this included:
• Streamlining our marketing strategies at every customer touch
point to highlight our “stepped up” style and enterprise-wide
merchandise offering. We are dedicated to building on this
success, as well as increasing membership in our JCP Rewards
loyalty program, which has grown to over 4 million customers —
who we know spend more and shop more often than our
average customer.
• Investing in our digital platform. We improved the functionality
of jcp.com, allowing customers to nd the right styles more
easily through innovative tools, such as our online runway
videos. Customers responded well to these enhancements, as
reected in the positive sales trend for jcp.com. Additionally, we
invested in social media, mobile applications, and our FindMore™
smart xtures in stores. Moving forward, we will continue to
invest in digital initiatives to capture market share.
• Remodeling or refurbishing approximately 100 stores, as
part of our ongoing efforts to make the customer shopping
experience more exciting. This included opening 64 new
Sephora inside JCPenney locations; we plan for 75 more in
2010, bringing the total to 230.
• Opening 17 new stores in attractive markets, where we are
competing aggressively. This included the July 2009 opening
of our rst-ever store in Manhattan, where JCPenney has proven
popular among residents and tourists, bringing good visibility
to JCPenney and our exclusive brands.
Dear JCPenney Stockholder:
In a difcult year for many American families, JCPenney
did what we do best — provided the quality merchandise
we are known for at prices that make sense for our customers’
pressured budgets, and “stepped up” our style to enable
them to be more fashionable than ever.
At the same time, we continued to execute our Bridge Plan,
which focused on tightly managing all aspects of our business
in order to protect our protability and put a solid operational
and nancial foundation in place to enable a return to a growth
trajectory. This included planning our inventory for a lower
level of sales, discontinuing several promotions that were not
productive for us, and reducing capital expenditures and
operating costs across the Company.
I am pleased to report that we achieved what we set out to
do when I wrote to you last year. Despite the worst economic
downturn our nation has seen in 80 years, we increased our
gross margin by 200 basis points to 39.4% of sales — an
historic peak for us. Our nancial strength is a considerable
competitive advantage, allowing us to invest in key areas of our
business at a time when others are cutting back. Moreover, we
maintained our 2009 annual cash dividend at $0.80 per share
for the benet of our stockholders and rewarded over 100,000
Associates with a special bonus check for their meaningful
contribution to our overall customer satisfaction scores, and
ultimately, our protability.
As a result, we believe we are well-positioned to focus our
attention in 2010 on delivering top-line sales growth, as we
begin to implement our new ve year Long-Range Plan.
Stepping Up Our Style and Enhancing
the Customer Experience
Over the past year, we introduced new, exclusive brands
across several merchandise categories. These new brands
are off to a promising start. They include Allen B.® by Allen
Schwartz and IkRonson® by Charlotte Ronson in Women’s
apparel; Olsenboye™ by Ashley Olsen and Mary-Kate Olsen
in Juniors’ apparel; JOE™ Joseph Abboud and Irreverent™ in
Men’s apparel; and Cindy Crawford Style™ in Home. We also
remain a “headquarters” for top national brands such as
Levi’s®, Carter’s® and Dockers®. We continue to make strides
in maximizing the potential of our leading private brands, such
as The Original Arizona Jean Company®, Worthington® and
a.n.a®, which deliver signicantly higher gross margins than
national or exclusive brands.
All of these brands are brought to life at JCPenney by our
exceptional merchandising organization. To ensure we
continue to tap our deep well of talent, we recently rened
Mike Ullman addressing Associates at the Manhattan store grand opening
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to our stockholders