Penney’s Expansion Includes Manhattan

NEW YORK – J.C. Penney has accelerated its store opening plans for the next five years and confirmed its plan to open its first Manhattan store in the soon-to-be-renovated Manhattan Mall in Herald Square here.

During its annual meeting with security analysts this week, the Plano, Texas-based retailer confirmed reports previously published in Women’s Wear Daily that it would open a 150,000 square foot store as part of Vornado Realty Trust’s redevelopment of the Manhattan Mall, just a block south of Macy’s in Manhattan’s Herald Square.

Penney’s previously had said it would open 150 units by the end of 2009, a pace of 50 a year. This week, it extended the calendar, but not the annual pace, to 250 new stores through 2011.

Penney’s also plans to renovate about 300 stores in the next five years.

Concurrently, the company said it expects its first quarter earnings from continuing operations to come in at $1.02 a diluted share versus its previous guidance of $0.99. There were no changes in guidance for the remainder of the current fiscal year.

Myron Ullman III, chairman and chief executive, and other members of Penney’s management laid out a series of financial objectives for the midtier department store as well. Among these was for total department store sales to increase in the mid- to high-single digits every year as same-store sales grow at a low- to mid-single digit rate. Direct sales are expected to increase in the mid-single digits. Growth in earnings per share was pegged at a compound annual rate of 16%.

Penney’s also wants to achieve a gross margin of 40% of sales by 2011 and an operating expense ratio of 28% of sales. Operating income is expected to reach 12% to 12.5% of sales in 2011.

Capital expenditures for the next four years are set at $1.275 billion per year.

The company also established a new goal of “becoming the preferred choice for a retail career” in a statement released to the press.

“Building on the strength and progress of the last two years, our new long-range plan is designed to make J.C. Penney the growth leader in the retail industry,” Ullman commented.

Penney’s currently operates 1,039 deparrtment stores. Its 2006 revenues totaled $19.9 billion.