J.C. Penney Looks for Source of New Business in Hotel Industry

May 18, 2017

Since individual consumers seem to be losing interest in J.C. Penney (jcp), the struggling department store is taking aim a potential new set of customers: other businesses.

Penney, which last week reported a dismal first quarter and whose shares are trading near all-time lows, said on Thursday it planned to leverage its new home services business to try to win more sales from hotels and other lodging companies.

The company last year resumed selling appliances after 33 years and currently is testing offering home services such as bathroom remodeling and blinds installation, and selling and installing awnings, as it looks to reduce its reliance on the dwindling apparel sector and boost sales in its home business with big-ticket items. Penney gave credit for the idea to sell to hotels to those businesses themselves, who it said were already placing big orders of bedding, bath and window treatments from its web site.

"Our entry into the B2B (business-to-business) program reinforces our home refresh initiative, while providing new and innovative ways to achieve sustainable growth and profitability," J.C. Penney CEO Marvin Ellison said in a statement.

Penney will use an outside sales force to line up new businesses, which will also include residential property managers, and says its private brands of home items like towels and sheets will give it an edge on cost.

Ellison estimated the U.S. hospitality industry is a $200 billion sector that offers significant opportunity for JCPenney to gain market share" and get more business out of each customers. If it takes, it could be a way for Penney to be less reliant on clothing and less exposed to malls' dwindling shopper traffic. And it would allow Penney to offer something different from Macy's (m)and Kohl's. (kss) Penney also said it will be expanding its mattress showrooms to an additional 300 stores by early fall.

Penney could use a home run right about now; last week it reported comparable sales fell 3.5% in the first fiscal quarter, well below what Wall Street expected, a disappointment given gains in its home and beauty businesses that shows just how troubled its apparel business is.

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