Hunker Down and Ride it Out

Already feeling the pinch, JC Penney CEO Mike Ullman isn’t bashful speaking out about a slowing economy and admits his chain is just as vulnerable as any other – but on a larger scale. He won’t talk about quarter-over-quarter increases and admits his concerns that comparable store sales are going to be spotty at best.

In a recent Dallas Morning News article Ullman spoke frankly about the need for the chain to stick to its heritage; service, price and updated selection. So if he’s doing that, and believes we’re not in for a quick spending turnaround, who else should we be watching?

Look to Target, a perennial favorite of ours to flourish in the expected tough days ahead. In fact, we expect Target to come out the other end stronger than ever. Quality and value still rein supreme and over the last year they’ve outperformed Wal-Mart and K-Mart fashions by avoiding sameness. Fashion and quality compare to Kohl’s, Mervyn’s and Penney but better priced and in many cases, with a wider color selection. Weekly promotions are working and assortments have continued to grow in breadth, not just depth.

In the same category we like Kohl’s but note that their success seems to be tied to deep discounting and timed promotions. If they stick to their weekly promotion rotations we think they’ll have another strong Back-To-School in late summer.  

And this week we took another look at Dillard’s and were astonished at inventory levels compared to other department stores. Dillard’s has bought to capture sales left unfilled in other stores and it’s nothing less than aggressive merchandising. Men’s and Junior departments are full and over half the floor racks are over-stuffed. Selection was plentiful and promotions are primarily house brands where there’s plenty of margin. Watch out world, Dillard’s is here to conquer.

Happy shopping …