As J.C. Penney moves forward with a planned turnaround effort in its catalog business that includes 2,000 job cuts, it expects catalog sales to drop 20% this month. The company has been reducing its reliance on the catalog to balance sales among the catalog, Internet and stores.
For the five weeks in December ended Dec. 28, catalog sales fell 23.7%, from $465 million a year ago to $355 million. The company said this was in line with expectations. The holiday catalog was 532 pages, compared with 600 pages in 2001. The online unit, which is included in the catalog business, reported a 20% increase in November and December.
For its third quarter, which ended Oct. 26, the firm reported that catalog sales decreased 21.2%, primarily due to lower circulation and page counts. But the margin per page increased due to these cutbacks, and the Plano, Texas-based company cited strength within its online sales, although it did not break out numbers. Net income for that quarter was $123 million, up from $31 million in third quarter 2001. The company’s sales rose from $7.7 billion to $7.9 billion during the same period, largely due to strength in its Eckerd drugstores division.
J.C. Penney has been one of the strongest retail performers in recent months and had a strong holiday period, boosted by aggressive discounts and heavy advertising.
The layoffs in the catalog division are planned to continue over the next few months in a cost-reducing measure that is expected to save the company $30 million. The job cuts were announced earlier this month.
Last Friday, J.C. Penney and Avon Products said that the two were terminating their partnership to sell an exclusive cosmetics line, ending Avon’s first attempt at selling at retail.
