J.C. Penney’s Michelle Wlazlo Talks Private Brands, Fall Plans

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David Moin
·8 min read
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Between its bankruptcy, COVID-19 and the departure of its chief executive officer, J.C. Penney has had more than its share of disruption.

So what about the merchandising?

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“There’s a nice drumbeat of new businesses and products to talk about,” Michelle Wlazlo, Penney’s executive vice president and chief merchant, told WWD. “The pace is thoughtful. We feel it’s right.” Efforts at introducing new private brands and refining existing ones continue “at a controlled pace,” said Wlazlo.

During Penney’s bankruptcy, which lasted from May to December, merchandising efforts went unimpeded, Wlazlo said. “We used that time wisely to get the work done. Nothing has changed. We felt confident the whole time that we would be here.”

The Plano, Tex.-based J.C. Penney Co. Inc., which was close to being liquidated, is still here thanks to two of its major landlords, the Simon Property Group and Brookfield Asset Management. They lifted Penney’s out of bankruptcy by acquiring its retail and operating assets. Simon and Brookfield needed Penney’s stores to continue to operate to keep other leaseholders in the malls and help get potential tenants to sign leases. Penney’s first-lien secured lenders, many of whom also supplied its debtor-in-possession financing, took over the property business that includes 160 real estate locations and six distribution centers. A vast amount of debt was erased from Penney’s books through the transfer of ownership.

The Authentic Brands Group, which owns several retail and fashion brands — among them Brooks Brothers, Lucky Brand, Barneys New York, Greg Norman, Nine West and Forever 21 — is a strategic partner in Penney’s with Simon and Brookfield, and will be a big factor in feeding merchandise to Penney’s and hopefully, fueling sales. While emerging from Chapter 11 in December with new owners after about seven months of bankruptcy court proceedings, the key to Penney’s staying in business is to rev up revenues, particularly in face of greater competition from the likes of Kohl’s Corp. and Target Corp.

Kohl’s, which has faced activist shareholder pressures of its own, is aggressively adding big-name brands to its assortment, including Tommy Hilfiger and Calvin Klein as well as Sephora shops-in-shop, which Penney’s also has had since 2006, but will phase them out as Kohl’s rolls them out starting in the fall. Penney’s agreement with Sephora runs through the latter half of 2022, but Penney’s said it is developing a new beauty strategy.

Target, meanwhile, has linked with Ulta for beauty, sharpened its apparel and home offerings and during the pandemic saw sales skyrocket due its characterization as an “essential retailer” allowing it to keep stores open all through the pandemic.

In an exclusive interview with WWD, Wlazlo outlined much of how Penney’s is working to advance its product offering. There’s been a strategy in place for more than two years since Wlazlo joined the retailer in February 2019 from Target. She was reporting to then-CEO Jill Soltau until last December, when Soltau abruptly left Penney’s. Simon’s chief investment officer, Stanley Shashoua, became interim CEO. A search for a permanent CEO was started, and Wlazlo reports to Shashoua, at least for now.

The strategy Soltau and Wlazlo formulated started by differentiating and sharpening the identity of key in-house labels, like St. John’s Bay, Xersion and a.n.a. They also reset the women’s selling floors with an easier-to-shop, lifestyle format with enhanced visuals and more thoughtful and obvious mannequin setups. What was a confusing sea of racks and aura of “stuff” had been disappearing. The company also closed scores of underperforming stores and eliminated several merchandise programs, including appliances. There have been questions whether under Soltau’s program Penney’s had the wherewithal to really effect deep change amid sliding sales and profits.

Last year, efforts shifted to rejuvenating the home business, and later this year, changes in men’s and kids’ will be noticeable, according to Wlazlo.

ABG’s Juicy Couture and Forever 21 labels will be added to the fashion assortment later this year. “We are excited to have ABG help us fill some white space in our portfolio,” said Wlazlo. “Forever 21 and Juicy Couture will be part of our portfolio. We anticipate some level of that this year. But we are not sharing right now the final dates,” of when the two brands start selling at Penney’s. She characterized Juicy Couture as offering “great comfort fashion and really relevant trend” and Forever 21 as bringing “high trend” to Penney’s junior business.

Even before the ABG labels land at Penney’s, “You will see more significant newness in men’s private brands and women’s in May. With kids’, you will see additional newness as we get into June and July,” Wlazlo said.

Last week, Penney’s introduced a private brand in home called Loom + Forge, which the company describes as a “modern” approach to indoor and outdoor decor, bedding, bath, window coverings and tabletop. The collection includes 100 percent cotton bedding and Turkish cotton bath pieces, marble serving trays and faux mink throws. Loom + Forge comes on the heels of Penney’s addition of Fieldcrest last March to the home assortment and expansion of Linden Street, another private brand in home launched in 2020, with decor, dinnerware, serve ware and table linens. Liz Claiborne and Home Expressions are also key private brands within Penney’s home assortment.

According to Wlazlo, 2020 was “a big year of strategic investment in our home portfolio.” While Penney’s has long been known for soft bedding and bath products, Loom & Forge brings a bigger tabletop and decor dimension to the store. Penney’s did carry some of these products but not as expansively as it does now.

Earlier this year, Penney’s launched three private swim brands in women’s, Mynah, Decree and Sonnet Shores.

Asked what the balance of private to national brands is at Penney’s, Wlazlo said, “Right now, it’s roughly 50-50. That will shift ever so slightly depending on customer needs [with] a slight increase in private brands. We really want that balance and so does our customer.

“Our private brands are all complimenting each other,” not cannibalizing each other, Wlazlo said. For example, “When you shop J.C. Penney online or walk in one of our stores, it’s much clearer what a.n.a. is versus St. John’s Bay; a.n.a. is really our denim lifestyle brand. It has been a very strong performer. St. John’s Bay is a timeless brand with incredible quality and value, bold colors and great key items.” Two other key private brands are Worthington and Stafford, which offer classic dress essentials like sheath dresses, lightweight jackets and crisp tops and bottoms.

In the active department, Penney’s Xersion brand “had a little bit of everything in it,” Wlazlo acknowledged. “Our customers told us it was not clear, that it should be a strong performance-only brand. We worked to ensure it was a performance-driven active brand,” with such technical attributes as wicking and anti odor. “We removed all the things that were confusing the brand, relaunched it in men’s and women’s and kids in January and Xersion has emerged as one of our largest private brands.

“Some of the hardest work involves taking out some of the choice,” Wlazlo explained. “It’s easy to throw every trend into a brand. The hardest thing about brand management is to restrain yourself from putting things in the brand that doesn’t belong.

“This year alone you will see launches or significant relaunches involving 13 private brands. We will have six new brands, a few have already launched and we will relaunch seven of our private brands. Surrounding that you will see a lot of expansion in active,” with brands such as Champion, Puma and Fila.

“We will have a drumbeat throughout the year of brand launches and brand refreshes. It’s about taking a fresh approach to the brand and examining whether it is fulfilling its brand promise. Customers love the brands at Penney’s. They just said make them better for me.”

Penney’s turnaround efforts, which seem perpetual, have to a great extent hinged on improving the women’s business. In 2019, women’s apparel accounted for 21 percent of Penney’s volume and women’s accessories, including Sephora, accounted for 14 percent. That makes women’s overall the largest segment of the retailer’s business. For fiscal 2019, total net sales decreased 8.1 percent to $10.72 billion and there was a net loss of $268 million. Losses continued through 2020, due to the pandemic, bankruptcy reorganization costs and lingering difficulties from past failed recovery strategies.

Men’s apparel and accessories is the second-largest segment, accounting for 22 percent of Penney’s total volume in 2019.

With last year’s home repair efforts, the home store appears to be gaining more prominent positioning. Still, Penney’s apparel business is larger than its home business, which accounted for 11 percent of the total business in 2019, representing the third largest division. Footwear and handbags represented 11 percent of the total business; kids, including toys, 9 percent; jewelry, 6 percent, and services and other areas, 6 percent.

Wlazlo said at J.C. Penney, there are about 25 “meaningful private brands across our portfolio of home, apparel, accessories and jewelry.”

“We are a dominant apparel retailer. That will not change,” said Wlazlo. “It’s really about putting more emphasis in home, where we lost our way. Home is always on the road map. Apparel shoppers want choices in home.” With the introduction of Loom + Forge, “We just launched a more modern home business.”

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