J. C. Penney — Investor Day (April 2007)
154 slides from J. C. Penney's investor day presentation, Apr 18, 2007
Slide 1: 2007 Analyst Meeting
2007 Analyst Meeting Exhibit 99.1
Slide 2: Michael Dastugue: Growth Leadership
Michael Dastugue Senior Vice President Property Development Growth Leadership
Slide 3: 2006-2007 Openings
2006-2007 Openings 2007 Store Openings 2006 Store Openings (28) (50)
Slide 4: 2003-2007 Openings
2003-2007 Openings (6) (14) (18) (28) (50) 2007 Store Openings 2006 Store Openings 2005 Store Openings 2004 Store Openings 2003 Store Openings
Slide 5: 2006-2007 Renovations
2006-2007 Renovations 2007 Renovations 2006 Renovations (48) (65)
Slide 6: Slide 6
Slide 7: yr Z
yr Z
Slide 8: Slide 8
Slide 9: Best-in-Class Team
Real Estate Area Research Store Environment Construction Services Best-in-Class Team Real Estate Area Research Store Environment Construction Services
Slide 10: Best-in-Class Process
Best-in-Class Process • Streamlined • Disciplined • Methodical • Consistent Delivery
Slide 11: Slide 11
Slide 12: Enhance our store portfolio
• Enhance our store portfolio • Existing store renovations • Evolution of the off-mall format • Grow our store base • New store openings The Retail Growth Leader
Slide 13: Enhance Store Portfolio Through Renovations
Enhance Store Portfolio Through Renovations • Goal: New store “ look & feel ” • Lighting • Carpet & Tile • Paint • Restrooms & Fitting Rooms • Fixtures • Layout & Adjacencies
Slide 14: SEPHORA
SEPHORA SEPHORA WOMEN’S WOMEN ’ S ’ S S WOMEN’S WOMEN ’ S ’ S S FOOTWEAR FOOTWEAR CHILDREN’S CHILDREN ’ S ’ S S FINE FINE JEWELRY JEWELRY HOME HOME MEN’S MEN ’ S ’ S S INTIMATE INTIMATE APPAREL APPAREL
Slide 15: ABs
-————— ABs ww. =| 4,
Slide 16: Slide 16
Slide 17: Renovation Plan
Renovation Plan • Complete 300 (2007-2011) • 65 approved for 2007 • Improve store condition • Currently: 45% new/renovated • Goal: 80% by end of 2011 90% of sales/operating profit
Slide 18: Renovation Performance
Renovation Performance • Stores renovated 2003-2005 exceeded profit plan by 21% in 2006 • Components paying off & resonating with customers
Slide 19: Prioritizing Capital Spending
Prioritizing Capital Spending • jTest • Statistically valid testing model • Objective analysis of impact • Helps prioritize resources
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Slide 21: The men's store / the home store
the men’s store depo. d the home store family restrooms ‘i
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Slide 23: Slide 23
Slide 24: Slide 24
Slide 25: Slide 25
Slide 26: Slide 26
Slide 27: Slide 27
Slide 28: Slide 28
Slide 29: Enhance our store portfolio
• Enhance our store portfolio • Existing store renovations • Evolution of the off-mall format • Grow our store base • New store openings The Retail Growth Leader
Slide 30: Grow Store Base
116 Grow Store Base 1200 2007 Existing Stores New Stores (cumulative total)
Slide 31: Grow Store Base
• 250 new stores (2007-2011) • 175 new / 75 relocations • 80%-90% off-mall • 18% square footage growth • 1,200 stores by 2011 Grow Store Base
Slide 32: 2007 Store Openings
2007 Store Openings
Slide 33: Location Strategy
Location Strategy • Large size markets • Multi-store • Trade area population 200-300k • Mid-size markets • Primarily single-store • Trade area population 100-300k
Slide 34: Location Strategy: Top Market
Location Strategy Top 20 Market
Slide 35: Houston market store map
Deerbrook Mall ao Willow brook Mall cypress West Grand Promenade West Oaks Mall Meyerlahd Plaza First Colony Mall a Grosenberg [i 2007 Openings Mall OfThe Mainiang Il 2005 - 2006 Openings BB &xisting
Slide 36: Chicago market store map
Bichieonry Chicago Hawthorn Genter Crystal Court Algonquin Bl Spring Hill Mall Woodfield Mall Golf mil sic Stratford Sq Mall Wi Northland Plaza | North-Aurora | Fox Valley SiC Montgomery ‘a@Gity Shopg Center Orland Park Mall Westfld Louis Joliet I Existing Westfld S/T@ S Lake Valparaiso
Slide 37: Location Strategy: Mall and Off-Mall
Location Strategy Mall • Core strength • Opportunistic acquisitions • Weekend / Holiday Off-Mall • Future growth • New customers • Frequent visits • Weekday
Slide 38: Opportunistic Acquisitions
NatickNatickNatick NatickNatick NatickNatickNatick Santa AnaSanta Ana Santa AnaSanta Ana Santa AnaSanta Ana Santa Ana Santa Ana Natick Santa Ana Opportunistic Acquisitions
Slide 39: Collin Creek Mall
Collin Comek Ma wae. Crossroads Waifs
Slide 40: New Store Success
New Store Success • Strong financial performance • Attracting new customers • Creating more frequent trips • Capturing greater wallet share • Smaller trade areas required • Less transfer sales
Slide 41: Slide 41
Slide 42: Key Takeaways
• 2007: • 50 new stores • 65 renovations • 2007-2011: • 250 new stores • 300 renovations • Off-mall format evolution Key Takeaways
Slide 43: JCPenney Every Day Matters
is iM iT [je is CPenney Every Day Matters’ ae jep.com =
Slide 44: JCPenney Every Day Matters
Lies CPenney Every Day Matters’ at, jcp.com —
Slide 45: Clarence Kelley: Improving Merchandise Relevancy
Clarence Kelley Executive Vice President Planning & Allocation Improving Merchandise Relevancy
Slide 46: JCPenney Merchandising Process
JCPENNEY MERCHANDISING PROCESS
Slide 47: JCPenney Merchandising Process
JCPENNEY MERCHANDISING PROCESS
Slide 48: Slide 48
Slide 49: What A Difference A Year Makes
What A Difference A Year Makes • Sales • Avg. Unit Inventory • Unit Turn • Gross Profit +6.5% -3.0% +8.0% +11.2%
Slide 50: Merchandise planning timeline
Store Trending Item Trending Initial Allocations Merchandise Flowback Pre-Season Financial Planning Pre-Season Merchandise Planning In-Season Execution Before Season Before Season Before Season 12+ Months 9 Months Item Planning Purchase Order Creation Conceptual Plan (Fabric Forecast) <9 Months 1 Mo
Slide 51: Assortment Planning System Integration
• Merchandise Planning • Store Planning • Store Grading • Purchase Orders • Basics Replenishment • Fashion Allocation Assortment Planning • Flow Planning • Size Profiling • Conceptual Planning Assortment Planning System Integration
Slide 52: Assortment Planning System Integration: Store Grading
• Merchandise Planning • Store Planning • Purchase Orders • Basics Replenishment • Fashion Allocation Assortment Planning • Flow Planning • Size Profiling • Conceptual Planning Assortment Planning System Integration Store Grading
Slide 53: Volume Grouping
Volume Grouping (Illustrative Department Grouping) # Stores 1,061 1,550 1,062 2,020 1,551 2,993 2,021 5,030 2,994 8,452 5,031 14,201 8,453 23,859 14,202 40,085 23,860 67,344 40,086 113,139 67,345 190,076 113,140 Max Sales $ Min Sales $ Grade
Slide 54: Store Grading
Store Grading • Assortments Adapted For Each Store Group • Floor Set Plan Development • Initial Allocation Structure • Balanced to Financial Plan
Slide 55: Assortment Planning System Integration: Flow Planning
• Merchandise Planning • Store Planning • Store Grading • Purchase Orders • Basics Replenishment • Fashion Allocation Assortment Planning • Size Profiling • Conceptual Planning Assortment Planning System Integration Flow Planning Flow Planning Flow Planning
Slide 56: Flow Planning
Flow Planning
Slide 57: Flow Planning
Flow Planning • Just In Time Store Receipts • Reduced Inventory Handling • Alleviates Stockroom Crowding • Supply Chain Efficiency • Ability to React to Sales • Increased Gross Margin • Improved Operating Profit
Slide 58: Assortment Planning System Integration: Size Profiling
• Merchandise Planning • Store Planning • Store Grading • Purchase Orders • Basics Replenishment • Fashion Allocation Assortment Planning • Flow Planning Planning Assortment Planning System Integration Size Profiling
Slide 59: Size Profiling: Pack Optimization
Size Profiling Pack Optimization Recommended Pack Configuration XL High L High M High S High XL Norm L Norm M Norm S Norm XL Low L Low M Low S Low Size Store Emphasis Size Range: S-XL Product Type: Tops Store: All Stores Pack Qty: 12 High Norm Low Number of Stores
Slide 60: Size Profiling: Open Stock
Size Profiling Open Stock 0.2 Norm 4.7 Norm 5.3 9 ½ Norm 10.5 Norm 15.0 8 ½ Norm 19.9 Norm 16.8 7 ½ Norm 11.5 Norm 8.8 6 ½ Norm 6.8 Norm 0.5 5 ½ Norm 0.2 Norm Sales Units Recommended Weight Size Store Emphasis Size Range: 5-10,11 Product Type: Shoes Store: 0899
Slide 61: Assortment Planning System Integration: Basics Replenishment
• Merchandise Planning • Store Planning • Store Grading • Purchase Orders • Fashion Allocation Assortment Planning • Size Profiling • Flow Planning • Conceptual Planning Assortment Planning System Integration Basics Replenishment Basics Replenishment
Slide 62: Purchase Order Basics Replenishment
Purchase Order Basics Replenishment
Slide 63: Basics Replenishment
Basics Replenishment • Reduced Warehouse Expenses • Improved Inventory Turn • Gross Margin Increase
Slide 64: Basics Replenishment
Basics Replenishment
Slide 65: Assortment Planning System Integration: Fashion Allocation
• Merchandise Planning • Store Planning • Store Grading • Purchase Orders • Basics Replenishment Assortment Planning • Size Profiling • Flow Planning • Conceptual Planning Assortment Planning System Integration Fashion Allocation Fashion Allocation
Slide 66: Fashion Allocation
Fashion Allocation
Slide 67: Merchandise planning timeline: in-season
Store Trending Item Trending Initial Allocations Merchandise Flowback Pre-Season Financial Planning Pre-Season Merchandise Planning In-Season Execution Before Season Before Season Before Season 12+ Months 9 Months Item Planning Purchase Order Creation Conceptual Plan (Fabric Forecast) <9 Months 1 Mo
Slide 68: Flow Strategy Success
Flow Strategy Success • Increased Sales • Customer Satisfaction • Shorter Product Cycle • Improved Sell Through Rate • Reduced Markdowns • Increased Inventory Productivity • Increased Profits
Slide 69: JCPenney Every Day Matters
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Slide 70: Peter McGrath: Improving Merchandise Relevancy
Peter McGrath Executive Vice President Product Development & Sourcing Improving Merchandise Relevancy
Slide 71: What is CTR?
What is CTR? What is CTR? Concept Concept Customer Customer
Slide 72: Sourcing process
YISING PROCESS
Slide 73: Slide 73
Slide 74: Slide 74
Slide 75: Sourcing: supplier, mill, factory, execution options
• Supplier • Mill • Factory • Execution Options • Buyer • Brand Manager • Product Development Manager • Sourcing Manager SOURCING
Slide 76: Benefits of CTR
Benefits of CTR • Fashion decisions made in quick response to customer demand • Ability to react in-season
Slide 77: Benefits of CTR
Benefits of CTR • Fashion decisions made in quick response to customer demand • Ability to react in-season • Improved flow of merchandise • Turnover improvement • Markdown improvement • Gross Profit improvement
Slide 78: Product Development Calendar: Where we started
Trend & color Design & sampling Buy Production 2005 Process Ship Month -6 -5 -4 -3 -1 -2 -7 -8 -9 -10 -12 -11 -13 On floor Domestic logistics Product Development Calendar Where we started . . .
Slide 79: Product Development Calendar: Where we are today
Where we are today . . . Core/ Essentials Calendar Fashion Targeted Spring 2008 Where we are today . . . Month -6 -5 -4 -3 -1 -2 -7 -8 -9 -10 -12 -11 -13 On floor Product Development Calendar
Slide 80: CTR: Progress to Date
• Established a full-time CTR team • Re-engineered business processes CTR: Progress to Date
Slide 81: CTR: Progress to Date
Quality Inspections Digital Color Approvals Product Performance Testing Fit Evaluations CTR: Progress to Date 4 Star Certification Quality Inspections Digital Color Approvals Product Performance Testing Fit Evaluations
Slide 82: CTR: Progress to Date
CTR: Progress to Date • Piloted 30-week calendar with a.n.a and Arizona kids • Implemented 40-week calendar for ALL private brands • Trained over 400 associates across the organization
Slide 83: Key CTR Changes
1. 60% reduction in color development time KEY CTR CHANGES
Slide 84: Key CTR Changes
1. 60% reduction in color development time 2. Shifted activities overseas closer to production KEY CTR CHANGES
Slide 85: Key CTR Changes
1. 60% reduction in color development time 2. Shifted activities overseas closer to production 3. Implemented pre-planning KEY CTR CHANGES
Slide 86: Key CTR Changes
1. 60% reduction in color development time 2. Shifted activities overseas closer to production 3. Implemented pre-planning 4. Executed raw material positions with key fabric mills KEY CTR CHANGES
Slide 87: Okie Dokie Knit Product
Okie Dokie Knit Product
Slide 88: Key CTR Changes
1. 60% reduction in color development time 2. Shifted activities overseas closer to production 3. Implemented pre-planning 4. Executed raw material positions with key fabric mills 5. Execute product flow programs with key suppliers for fashion items KEY CTR CHANGES
Slide 89: Once & Done
ONCE & DONE Factory ONCE & DONE ONCE & DONE STORE FASHION FASHION
Slide 90: Once & Done Finished Goods
ONCE & DONE FINISHED GOODS ONCE & DONE STAGE & FLOW STAGE & FLOW (Hold Back) (Hold Back) JCP Warehouse Supplier STORE FINISHED GOODS
Slide 91: Once & Done React to Size
ONCE & DONE REACT to SIZE Factory ONCE & DONE REACT to SIZE REACT to SIZE STAGE & FLOW STAGE & FLOW STORE FINISHED FINISHED FABRIC FABRIC
Slide 92: Once & Done React to Size Greige Goods
ONCE & DONE REACT to SIZE GREIGE GOODS SIZE & COLOR SIZE & COLOR ONCE & DONE ONCE & DONE STAGE & FLOW STAGE & FLOW REACT to SIZE REACT to SIZE Factory STORE GREIGE GOODS
Slide 93: Warehouse Replenishment
Warehouse Replenishment ONCE & DONE REACT to SIZE Factory STAGE & FLOW STAGE & FLOW SIZE & COLOR SIZE & COLOR Warehouse Replenishment ONCE & DONE ONCE & DONE REACT to SIZE REACT to SIZE Warehouse AUTOMATIC AUTOMATIC PULL PULL
Slide 94: CTR Makes Strategic Flow a Reality
ONCE & DONE REACT to SIZE WAREHOUSE REPLENISHMENT CTR CTR Makes Makes Strategic Strategic Flow Flow a a Reality Reality STAGE & FLOW STAGE & FLOW ONCE & DONE ONCE & DONE REACT to SIZE REACT to SIZE SIZE & COLOR SIZE & COLOR WAREHOUSE REPLENISHMENT WAREHOUSE REPLENISHMENT
Slide 95: Where We are Going: Taking Speed To A New Level
Where We are Going: Taking Speed To A New Level
Slide 96: CTR: Product Lifecycle Management
CTR Taking Speed To A New Level 1. Product Lifecycle Management • Increase speed • Create and cost product more efficiently • Further integrate our global suppliers
Slide 97: CTR: Hub and Spoke Environment
1. Product Lifecycle Management 2. Hub and Spoke Environment • Leverage vertical manufacturing • Reduce transport time and cost CTR Taking Speed To A New Level
Slide 98: CTR: Continuous R&D and Training
1. Product Lifecycle Management 2. Hub and Spoke Environment 3. Continuous R&D and Training • Product innovation • Process discipline CTR Taking Speed To A New Level
Slide 99: CTR: Migrate Activities Overseas
1. Product Lifecycle Management 2. Hub and Spoke Environment 3. Continuous R&D and Training 4. Migrate Activities Overseas • Certify additional suppliers • Further reduce downtime CTR Taking Speed To A New Level
Slide 100: Speed / Efficiency
SPEED Efficiency
Slide 101: Slide 101
Slide 102: CTR is a journey not a destination
CTR is a journey not a destination
Slide 103: JCPenney Merchandising Process: Supply Chain
JCPENNEY MERCHANDISING PROCESS SUPPLY CHAIN Pe
Slide 104: JCPenney Every Day Matters
a ie Lies CPenney Every Day Matters’ wy jep.com
Slide 105: JCPenney Every Day Matters
a ie Lies CPenney Every Day Matters’ wy jep.com
Slide 106: Mike Theilmann: Become the Preferred Choice for a Retail Career
Mike Theilmann Executive Vice President Chief Human Resources & Administration Officer Become the Preferred Choice for a Retail Career
Slide 107: Become the Preferred Choice for a Retail Career
Become the Preferred Choice for a Retail Career
Slide 108: Winning with
• Associate Engagement • Talent Retention and Acquisition • Leadership Development • Corporate Social Responsibility WINNING with:
Slide 109: Slide 109
Slide 110: Winning with Associate Engagement
WINNING with Associate Engagement
Slide 111: Measuring Associate Engagement
Measuring Associate Engagement
Slide 112: Winning Together Survey Results
WINNING TOGETHER Survey Results: Participation Engagement 2005 2006 20 pts 7 pts
Slide 113: Benefits Plans Improvements
Benefits Plans Improvements 2005 2006 11 pts WINNING TOGETHER Survey Results:
Slide 114: Engaged Associates Grow the Business
Engaged Associates Grow the Business
Slide 115: Engaged Associates Build Customer Relationships
Engaged Associates Build Customer Relationships
Slide 116: Winning Together
FSS SS Penney aia You: WINNING TOGETHER’
Slide 117: Retail Industry Leader in Training
Retail Industry Leader in Training
Slide 118: jPOS
j POS
Slide 119: Inside JCPenney
‘allinaide Penney
Slide 120: jLearn
j Learn
Slide 121: Science of Sephora
“Science of Sephora”
Slide 122: Science of Sephora
“Science of Sephora”
Slide 123: jcp.com
jep.com
Slide 124: Bra Fit Certification Plaques
Bra Fit Certification Plaques
Slide 125: Shoes, Furniture, Fine Jewelry, Window Coverings, Men's Clothing
Shoes Furniture Fine Jewelry Window Coverings Men’s Clothing
Slide 126: Winning with Talent Retention & Acquisition
WINNING with Talent Retention & Acquisition
Slide 127: Winning with Talent Retention
WINNING with Talent Retention
Slide 128: Talent Retention: Turning jobs into careers
WINNING with Talent Retention: Turning “jobs into careers”
Slide 129: Winning with Talent Acquisition
WINNING with Talent Acquisition
Slide 130: Talent Acquisition: Hiring The Best Talent In The Industry
WINNING with Talent Acquisition: Hiring The Best Talent In The Industry
Slide 131: New Approach
@) EJOTINS BAY. ioe WORTHINGTON" Bahome Armiporielle sft Aa NEW APPROACH
Slide 132: Designers In Training
Designers In Training
Slide 133: Designers In Training
Designers In Training
Slide 134: Inclusion & Diversity
Inclusion & Diversity
Slide 135: Winning with Leadership Development
WINNING with Leadership Development
Slide 136: Slide 136
Slide 137: JCPenney Winning Together
JCPenney WINNING TO | (0 }
Slide 138: Leading Together
WINNING TOGETHER Leading Together
Slide 139: JCPenney Winning Together Leading
JCPenney WINNING TOGETHER LEADING
Slide 140: Leading a Store
WINNING TOGETHER Leading a Store
Slide 141: JCPenney Winning Together
JCPenney WINNING TOGETHER LF ot NG?
Slide 142: Leading a District
WINNING TOGETHER Leading a District
Slide 143: Retail Academy
mip TOGETHER DING, LEADING Retail. ACADIEMN
Slide 144: Queens, NY
Queens, NY
Slide 145: Queens, NY
Queens, NY
Slide 146: Winning through Corporate Social Responsibility
WINNING through Corporate Social Responsibility
Slide 147: Slide 147
Slide 148: Powering their potential
xTAKE Ax PLAYER Verricy JAN afterschool TO SCHOOL CONCERT FoR! powering their potential AMERICAS KIDS
Slide 149: Slide 149
Slide 150: JCPenney Every Day Matters
a ie Lies CPenney Every Day Matters’ wy jep.com
Slide 151: 2007 Analyst Meeting
2007 Analyst Meeting
Slide 152: Mike Ullman: 2007-2011 Long Range Plan
Mike Ullman Chairman and Chief Executive Officer 2007 – 2011 Long Range Plan Accelerated Growth . . . Industry Leadership . . .
Slide 153: Key Differentiators
• Every Day Matters. . . Inspiring Customers • American Living • Sephora inside JCPenney • 8 JCP Power Brands • Merchandise Flow Strategy • jcp.com Leadership • New Store Growth . . . 250 New Stores • Investing in Existing Stores • Best Talent in Retail • 16% EPS CAGR Key Differentiators:
Slide 154: JCPenney Merchandising Process
2007 Analyst Meeting JCPENNEY MERCHANDISING PROCESS MERCHANDISE PLANNING PRODUCT DEVELOPMENT SOURCING SUPPLY CHAIN ALLOCATION SELLING • Consumer Research • Assortment Strategy • Brand • Trend • Sourcing • Planning Variables • Concept • Merchandise Mix • Item Planning • Assortment • Store Grading • P