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TheStreet Open House

Why JCP's Online Strategy Is Not That Bad

Stocks in this article: JCP AAPL ANN FIVE BURL M GOOG AAPL

NEW YORK (TheStreet) - J.C. Penney (JCP - Get Report) is getting it operations back into neutral as evidenced by comparable sales growth of 6.2% in the first quarter, ahead of what analysts were predicting. Yet, as the department store works through its turnaround, is the company placing enough emphasis on its e-commerce and mobile strategies?

J.C. Penney said last night that online sales rose 25.7% in the first quarter over the same period last year, yet didn't report a specific dollar amount. For all of 2013, jcp.com sales rose 5.8% to $1.08 billion, about 9.1% of the retailer's total sales for the year.

Yet analysts and observers are scratching their heads as to what exactly is J.C. Penney's e-retail strategy, especially as consumers seek online and mobile purchasing options to both supplement and replace traditional ways of shopping.

"I don't think they have one," says Maglan Capital's David Tawil, when asked about J.C. Penney's online and mobile strategy. "I would like to know how they think about how bricks-and-mortar shopping is changing and how mobile shopping is developing, and how J.C. Penney is going to be relevant in 10 years. [Also] is their mobile strategy just going to be a battle against attrition or do they have thoughts about how to turn mobile into a gainer?"

In March, Wells Fargo Securities analysts took a closer look at the mobile offerings by the retailers it covers. Of the analysts' coverage list, 43 of the 62 companies had discussed mobile offerings over the past 12 months, meaning the other 19 companies were silent on their efforts. Those companies included Ann Taylor (ANN), Burlington Stores (BURL), Five Below (FIVE) and J.C. Penney.

"While most of these names are not surprising given their minimal e-commerce penetration (some don't even have e-commerce sites), we were surprised to hear no mention of mobile from JCP and ANN over the past year (perhaps they are keeping their initiatives tight-lipped)," the analysts said in the research note.

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