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Penney’s New Home Makeover

BY Marianne Wilson

J.C. Penney has a lot riding on its new home department makeover. Industry analysts say the revamp, a central element of former CEO Ron Johnson’s plan to transform the chain, is critical to the department store’s future. Home represented 12% of Penney’s sales in 2012, down from 15% in 2011. It was the worst performing category last year.

It’s too early to predict, of course, how the new merchandise will fare with Penney customers. Some of the price points may be too high, particularly the furniture in the Happy Chic by Jonathan Adler collection. The same goes for the furniture in the Design by Conran furniture. While both lines are well designed, I’m just not sure that Penney customers will take to the upmarket prices or the stylings, which may be too sophisticated (Conran) or too whimsically-hip (Adler). As for that infamous “Hitler” tea kettle from the Michael Graves line, it sells for $40 and is on backorder, with a promise ship date on or before the end of August. See what a little viral buzz can do!

One thing customers are going to like is the chain’s renewed emphasis on promotions. To support the launch, Penney is offering 20-40% off on select items throughout the home department, plus an extra 10% off on purchases made June 6-June 9. Customers who sign up for JCP Home text alerts receive a $10 off $30 coupon.

Overall, the influx of the new merchandise into Penney is a breath of fresh air. And the presentation of the brands in the stores is first rate, with updated flooring, accent lighting, custom fixtures, and wider aisles.

In a report entitled “High Hopes for Home: Highlights from JCP’s Home Launch Event,” Citi Research analyst Deborah Weinswig said she was impressed with the product quality of the new home merchandise. And while she noted that many of the brands are offered at the company better/best price points and above the average price point in home, she believes that the return to traditional promotional pricing will help sell-through rates.

In the same report, Weinswig brought up another important point: “With the launch now behind it, JCP can focus on remerchandising the store, rebuilding inventory levels, marketing to loyal customers, and reinvigorating online,” she wrote.


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J.GREEN says:
Jun-10-2013 03:05 pm

Great thoughts Marianne. My concerns are that the "home" department typically performs at a lower sales/square foot productivity than the rest of the store. Is this really where they should be putting their energies? In contrast, I am happy to see JCP spending some money to inform the general public that there are changes occurring!

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Acquisition of Heinz complete

BY CSA STAFF

PITTSBURGH — Berkshire Hathaway and an investment fund affiliated with 3G Capital have completed their acquisition of H.J. Heinz Company.

Heinz shareholders will receive $72.50 in cash for each share of common stock they owned as of the effective time of the merger, without interest and less any applicable withholding taxes. As a result of the completion of the merger, the common stock of Heinz will no longer be listed for trading on the New York Stock Exchange and Heinz expects no further trading after the close of business on June 7.

Bernardo Hees has become CEO of Heinz, effective immediately.

“I am honored today to become Heinz’s seventh CEO in the company’s renowned 144-year history. I look forward to building upon Heinz’s incredible platform and delivering world-class products for all of our consumers around the world, while maintaining the company’s unwavering commitment to quality, safety and superior customer service,” said Hees, regarding his appointment.

Meanwhile, William R. Johnson, who the company credits with having transformed Heinz into a high-performing global leader in the packaged foods industry, has retired as Heinz’s chairman, president and CEO. He was with the company for 31 years — 15 of those years as its CEO. Going forward, Johnson will serve as a part-time advisor to Hees on certain specific industry and strategic non-operating matters.

Heinz also announced that Paulo Basilio has become CFO, and will report directly to Hees.

“Paulo will be an invaluable partner to me as Heinz transitions to a private company, while positioning ourselves for continued domestic and global growth,” added Hees.

Basilio, 38, is a partner at 3G Capital. Previously, he served as CEO of America Latina Logistica from 2010 to September 2012, after having served as ALL’s COO, CFO, commercial officer and analyst. Basilio holds a M.Sc. in economics from Fundacao Getulio Vargas in Brazil.

Berkshire Hathaway and its subsidiaries engage in diverse business activities including property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, retailing and services.

3G Capital is a global investment firm focused on long-term value, with a particular emphasis on maximizing the potential of brands and businesses. The firm works in close partnership with management teams at its portfolio companies and places a strong emphasis on recruiting, developing and retaining top-tier talent.

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Report: Target revs up grocery business

BY CSA STAFF

NEW YORK — Target has set its sights on consumers who want organic, natural products, with a new organic and natural store brand called Simply Balanced, according to a report by the Associated Press.

Target told the AP that it will begin to roll out drinks and snacks like corn chips on Sunday, June 9. According to the report, the line is an outgrowth of similar products within its existing Archer Farms store brand, which is positioned as a premium alternative to national name brands.

The report comes in the same week Walmart announced plans to make changes across produce sourcing, training and operations to offer customers fresher produce — plans which the company plans to back up with a 100% money-back guarantee — as well as Amazon’s announcement that it plans to expand a long-running grocery delivery program in its hometown of Seattle to the Los Angeles area.

To read about Target’s plans to rev up its grocery business, click here.

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