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J.C. Penney Vendor Says Yet to See Chain’s Sales Recover

Allen Schwartz, who decided to end his apparel firm’s exclusive supplier deal with J.C. Penney Co. (JCP) after five years, said he’s yet to see a sales rebound at the department-store chain that lost $1.61 billion in the past year.

“No signs of improvement,” said Schwartz, who is founder, owner and creative director of Los Angeles-based ABS by Allen Schwartz. “It’s not going to happen overnight,” he said in a telephone interview yesterday.

Schwartz licensed his Allen B. women’s sportswear and dress brand to J.C. Penney in an agreement in which his firm designed and sourced the wares while the retailer handled manufacturing. The company decided not to renew because J.C. Penney management was “indecisive” on future plans for the brand even after it brought back Mike Ullman to replace Ron Johnson as Chief Executive Officer in April, Schwartz said.

“There was just too much back and forth, and them being inconsistent,” said Schwartz. “Their whole way of operating wasn’t transparent.”

Schwartz said his items over the past five years appeared in anywhere from 600 to 900 of J.C. Penney’s locations. He declined to provide sales figures for his garments in the retailer’s stores.

Alienated Shoppers

J.C. Penney is trying to revive sales after revenue tumbled 25 percent to $13 billion last year, the worst performance in at least two decades, after Johnson’s attempt to remake the retailer alienated shoppers. Since taking over in a second stint as CEO, Ullman has shored up the retailer’s finances by borrowing about $3 billion, re-introduced discounts and brought back merchandise. In the first quarter under his direction, the sales decline slowed to a drop of 12 percent.

Schwartz negotiated with J.C. Penney for a couple of months before deciding not to renew the deal, which ends in January, he said. During that time, the chain pushed to get the license for less money, according to Schwartz. Ending the relationship wasn’t because of doubts about J.C. Penney’s future or its finances, he said.

The Allen B. brand represents a “small fraction” of J.C. Penney’s women’s apparel business, Daphne Avila, a spokeswoman for the chain, said in an e-mail yesterday. The clothes are currently in less than 700 of the company’s 1,100 stores, she said. Avila declined to comment on negotiations with Schwartz.

Women’s Wear Daily reported earlier that Schwartz had decided to end the relationship with J.C. Penney.

The retailer’s shares fell 2.3 percent to $13.14 at the close in New York yesterday. The stock has declined 33 percent this year, compared to a gain of 21 percent for the Standard & Poor’s 500 Index.

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

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

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