Plano, TX, Apr. 20--J.C. Penney Co. Inc. top executives said on Monday the retailer is looking to stores it sets up away from malls to help its finances as it adds new outlets to its operations.
Chief Executive Allen Questrom told analysts at a meeting at the company's headquarters in Plano, Texas that Penney did not plan to use money from its recent agreement to sell its Eckerd drugstores to finance any major acquisitions. He reiterated that money from the some $4.35 billion sale will go to buying back company stock and debt.
The executives said that Penney planned to add or relocate 14 stores in 2004, which is the most it has added in five years. Seven of those stores will be off-mall, they said, adding Penney could add some 75 to 100 stores over the next several years.
"The majority will be off-mall," said Ken Hicks, the retailer's president and chief operating officer.
The off-mall stores are a new twist for the retailer, and they are typically smaller and less expensive to operate than larger stores in malls, Hicks said. While the off-mall stores have higher costs to open, they offer greater sales per square foot of retail space than stores in malls, he said.
In prototype stores, Penney is looking at a single checkout area at the front of the store, he said, adding these stores present growth opportunity for the retailer that does not rely on the development of new shopping malls.
The company expects to have renovated 50 stores over last year and this year, at a cost of some $2 million to $3 million per store, in an attempt to enhance their performance.
Questrom said the retailer has a chance for a good year, but variables such as skyrocketing fuel prices may cloud the picture.
Earlier this month, Penney said March sales at department stores open at least a year climbed a better-than-expected 11.4 percent thanks to strong demand for spring apparel and early Easter sales.
Penney also raised its quarterly earnings forecast based on the strong sales and positive gross margins. It said it expects first-quarter earnings in the range of 20 cents to 25 cents per share.
A strong start to the spring season has allowed U.S. retailers to sell more merchandise at full price, boosting profitability.
