J.C. Penney Says New Shops Doing Better Than Rest of Store

J.C. Penney Co. Chief Executive Officer Ron Johnson said its new shops are doing better than the rest of the store as the retailer turns locations into a collection of branded boutiques.

J.C. Penney will eventually have 100 shops in stores and change 25 of them every year, Johnson said today during an investor presentation. He said the Plano, Texas-based retailer will compete with the “fast fashion” of Hennes & Mauritz AB (HMB) and Century 21.

Johnson, Apple Inc. (AAPL)’s former retail chief, compared the new layouts to iPhone applications and said several designers are interested in having shops. Implementing the new layout is central to Johnson’s plan to turn around the fourth-largest U.S. department store company, which saw sales slide 20 percent in the first quarter.

It is “way too early to draw conclusions” about the new layout, Johnson said, adding that women’s shops are “off the charts.”

J.C. Penney rose 0.1 percent to $29.09 at the close in New York. The shares have dropped 17 percent this year.

“I like the story, but you are talking 2014 before the concept is in place enough for it to really figure,” Noel Hebert, chief investment officer of Bethlehem, Pennsylvania- based Concannon Wealth Management LLC, said today in an e-mail. “Right now, your store-within-a-store brands/boutiques are doing well, but are not large enough to move the needle.''

Last month, the retailer added Levi Strauss & Co. denim bars and five other mini-shops in 683 stores.

To contact the reporter on this story: James Callan in New York at jcallan2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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