Penney plans to use the freed-up prime floor space for its more-profitable exclusive private-label brands. The retailer has brought back its billion-dollar St. John's Bay apparel line as well as JCP Home and Cooks, and it plans to reintroduce its Ambrielle lingerie in February.
The changes are the latest efforts by Ullman, 67, to rebuild the retailer, whose sales tumbled 25 percent after Johnson tried to make the stores more upscale and eliminated popular coupons and brands.
Ullman had led Penney between 2004 and 2011. When he returned in April, he immediately reinstated the discounts and brought back St. John's Bay to get longtime customers back in stores.
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"The customer never gave up on the goods," he said. "We gave up on the customer, and we paid a price for it."
During Ullman's first stint as CEO, Penney's sales and gross profit margins reached all-time highs, and the company introduced the wildly successful Sephora cosmetics "shop-within-a shop" that was the blueprint for Johnson's transformation plan.
But Penney's cost structure and sales per square feet lagged those of rivals, and the chain was seen by many as stagnant. In 2010, that attracted activist investor William Ackman, who pushed to replace Ullman with Apple retail star Johnson the following year to transform Penney.
Johnson's strategy, which included dumping many Penney brands, cost the chain $4 billion in sales in 2012 and hurt gross profit margins. The lingering effects sent the stock to a 31-year low of $6.24 in October. It was trading at $8.38 on Thursday morning.
Last quarter, gross profit was 29.5 percent of sales, about eight percentage points below historical averages. This measure of merchandise profitability is about 5 percentage points higher for private brands because stores do not have to share profits with vendors and can control when items go on sale.