JCPenney’s three-year venture into major appliances is coming to an end.
Following what was initially seen as a successful re-entry into the category under previous CEO Marvin Ellison, his successor Jill Soltau is pulling the plug on majaps.
The decision was made “in order to better meet customer expectations, improve financial performance and drive profitable growth,” the department store said.
The move follows a period of unprecedented pricing pressure on appliances as tariffs contributed to cost increases while marketplace competition prompted fierce promotional activity during the holiday season.
At last count Penney had brought its appliance assortment to more than two-thirds of its stores within the first two years of the initiative, with Ellison describing the category as a “significant” driver of comp growth and lauding its gross margin dollar productivity. Featured majap brands include Frigidaire, GE/Haier, LG and Samsung.
The boasts were partly born out by TWICE’s most recent Top 50 Major Appliance Retailers Report, which showed an 18.4 percent spike in Penney’s white-goods sales last year, to about $148 million.
Ellison brought the category back after a 30-plus-year absence amid majap share declines at Sears and hhgregg, unproductive floor space within its home departments, and market research suggesting that its largely female customer base would welcome it.
But his successor, Soltau, has bigger fish to fry, including existential challenges to the business. Ellison, who left last year for the CEO spot at Lowe’s, did much to turn the company around following missteps by his predecessor, former Apple Stores chief Ron Johnson. But losses, debt and sagging sales persist, and Soltau, formerly president/CEO of craft and fabric chain Joann Stores, must now redefine Penney’s role within a rapidly changing retailscape.
Since joining the company last October, she has appointed an interim chief financial officer, formed a new cross-functional executive team, and brought in former McKinsey & Co. management consultant Truett Horne as chief transformation officer. Cutting loose appliances is Soltau’s first major merchandising move.
Instead, Penney will focus on apparel and soft home furnishings, two legacy categories that “represent higher margin opportunities,” and will reallocate store space accordingly. “We are finalizing new layout options, including the reduction of store space previously dedicated to appliance and furniture showrooms to maximize efficiencies, reduce inventory and create an enhanced shopping experience that inspires repeat shopping trips,” the company said.
While Penney will sell its last appliance on Feb. 28, furniture will be relegated to online sales and select stores in Puerto Rico. Mattresses, however, will continue to be sold in more than 450 locations and at jcp.com.
Given Penney’s 21st-place ranking on the TWICE Top 50, its departure from white goods is expected to have little short-term impact on major appliance manufacturers or retailers. It does, however, take a potential long-term successor to No. 4 Sears out of the running.