JC Penney turnaround faces big test with home goods relaunch

J. . Penney o. Inc. is about to undo the centerpiece of former chief executive officer Ron Johnson’s failed vision to take the retailer upmarket.

n hursday, the department store chain is relaunching its home goods sections. It has brought back many of the more affordable, no-frills brands the former pple executive ditched and reduced the space given to trendier brands he thought would bring in new shoppers.

Penney is trying to rebuild its home business by offering more lower priced items, more in-house brands and additional floor space for basics like towels and comforters. he retailer wants to recapture former clients and go head to head with rivals like arget orp. and ohl’s orp. Fixing the home business is crucial to Penney’s fledgling turnaround, both in-store and online, where it generates half of

jcp.com’s sales. “Home is a traffic driver for the whole store,” said Jan Hodges, senior vice president in charge of Penney’s home goods business. tore visits fell percent during Johnson’s term and continued to slip in .

he company, once a leader in the sector, saw sales of home goods plummet to about . billion in from . billion seven years earlier.

In 6, home products generated about percent of Penney sales, on par with rivals acy’s Inc., ohl’s orp. and arget orp. ast year, they were about percent.

o be sure, some of the decline stemmed from its decision to get rid of its catalog order business in , but most of it was from misreading its customers.

Initial reaction has been positive. itigroup upgraded the stock on uesday because it expects the new home sections will lift sales. Penney shares have risen since it gave an upbeat forecast last month but are still percent below a yearly high hit last ay.

“ hey went astray when they brought in cake mix,” said athy ersch, a former department store executive and co-founder of otter International, a consulting firm that helps companies implement strategies. “ he uestion remains whether they can get that customer back.”

Penney will have to win back shoppers who drifted to competitors. t Home oods, owned by J os Inc., sales nearly doubled to .8 billion between and last year, while arget and ohl’s saw steady growth.

dding to the challenge is that many of Penney’s price-conscious shoppers remain reluctant to spend on extras.