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The Plano-based department store chain says it has sharpened prices even more for Christmas, talking Godiva into $9.99 chocolates, discounting the Snuggie blanket (with sleeves) to $14.99, and pricing fashion boots under $50 and cashmere-blend pea coats for $99.
"We've stepped up our sense of style with shocking prices," said Mike Boylson, chief marketing officer. "We're able to pass our efficiencies on to customers. We get the margins we need, and the customer gets the value."
Last year, retailers were caught off guard by the recession's severe impact on consumer spending. Penney's clearance discounting competed with its own promotional pricing. Same-store sales fell 13.5 percent in the fourth quarter of 2008.
About $2 billion in sales Penney had expected in 2008 never materialized as shoppers pulled back spending, resulting in the industry's worst holiday season in decades.
Penney and most retailers are heading into this holiday season with more information. Although most holiday forecasts are for spending to decline again in November and December, at least store inventories are more likely to match up this year with consumers worried about unemployment and rising gas prices.
"We know where the customer's head is this year," Boylson said Tuesday.
Today, style and new fashions are still selling, he said. But whether customers are buying basics or things they desire, "they all want price reassurance."
Citigroup retail analyst Deborah Weinswig made Penney one of her top picks for the season for its improved competitive positions, better margins, easier year-over-year comparisons and its focus on customer service. (Her other picks are Macy's and Target.)
Top staffers have been trained in this year's holiday gift selections to help shoppers. They'll be wearing red aprons.
All Penney's holiday marketing includes the "style, quality and price" tagline. Commercials feature a holiday party as seen through the eyes of a young boy. Prices overlay the items in this year's ads.
The Santa and Scrooge line is from an ad campaign running on bus stop and subway signs in New York. Penney opened its first Manhattan store in July. Penney's ad agency, Saatchi and Saatchi, also came up with "For the record, no kid wants a sugarplum."
Penney and other major U.S. chain stores report October sales on Thursday. Penney is scheduled to release third-quarter earnings Nov. 13.
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