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JC Penney's CEO maps out three-year turnaround plan

JC Penney CEO Marvin Ellison on Wednesday outlined the company's three-year plan to boost performance amid an ongoing turnaround.

"We have a couple of huge initiatives that we believe will be net positive, not only for the fall season, but for the next three years," Ellison told CNBC's "Power Lunch" from the company's analyst day.

JC Penney said that between 2017 and 2019, it anticipates compounded annual same-store sales growth to be about 3 percent. The department store operator said that over that period, it expects gross margins to improve between 75 and 100 basis points.

By 2019, JC Penney forecasts earnings between $1.40 to $1.55 a share. The company also said it sees net income to come in between $450 million and $500 million by 2019.

Last week, the retailer reported a quarterly loss of 5 cents per share and posted revenue of $2.88 billion, missing sales forecasts. The company reiterated its 2016 guidance with plans to implement various initiatives. It expects a comparable-store sales gain of 3 percent to 4 percent.

Ellison said appliance sales have been great for the company and have positively affected other categories at JC Penney.

"We're rolling out appliances in 500 stores this year and we see continued growth over the next couple of years. We have a strong aggressive plan to fix our windows business," Ellison said. "What we do know is that a third of the customers buying appliances from us are brand new customers to JC Penney. "

Ellison also mentioned that 70 percent of those appliance customers are buying the products on a JC Penney credit card.

"In the US, 100,000 appliances break every day, so customers will always need appliances. The appliance market is expected to grow at 30 percent over the next three years," Ellison said. "There's not many retail categories that have that type of growth predictions or trajectory over the next three years."

Ellison said the company would also focus on expanding Sephora in store locations and its omnichannel business as a part of the three-year plan.

JC Penney shares have climbed more than 60 percent this year.

— CNBC's Krystina Gustafson contributed reporting to this article.