JCP
#<UNK>, we were really pleased with the Home catalog.
It's incremental.
We sent 88% of them to lapsed customers.
So the fact that we got such a great response, it was a customer that we wanted to come back; but they didn't particularly have an invitation until they got the catalog.
So we are repeating it again in the fall.
We're not going back to the 1,000-page several times a year book.
That's, frankly, with paper and postage, not a good proposition; and, frankly, that's not the way the customer wants to shop.
The advantage of the Home catalog, is we may have 150 beds online and only 25 beds in the store.
One advantage of the catalog is you can show more imaging and let the customer use the catalog as a guide to shopping online.
That's what we've learned.
We think it's going to pay off not only in terms of getting the customer back to us online, but also might encourage them to come into the stores.
So we are very pleased with that.
We don't see it going into a lot more categories at the moment; but we will obviously test and if we find something that resonates, we'll do it.
On the real estate side, I will let <UNK> speak to that overall.
But generally, our real estate is encumbered at this point.
We don't really have a big real estate play, so to speak.
It's not about the real estate for us as much as it is getting back our operating business, and that's where we are focused.
<UNK>, do want to add anything else.
Yes, <UNK>, this is <UNK>.
I would just add that, as <UNK> said, it is encumbered by a real estate term loan.
Our no-call provision actually rolls off this month.
That's something we continue to look at.
We know it is probably over-collateralized, and there may be some opportunity there.
We also know that it doesn't come due until 2018, so we don't have a gun to our head to have to do anything anytime soon.
We will continue to monitor rates and see if there's any opportunity to do something there.
Obviously, we continue to look at what's happening in the industry between the sale/leasebacks and the REITs that our competitors are doing.
We spend a lot of time looking at that, and we'll continue to look at it.
But given the real estate term loan and just the overall complexity of those deals, there's a tremendous amount of complexity there.
As <UNK> said, it's not top of our priorities right now.
We're focused on driving EBITDA and driving top-line results.
We'll continue to look at it.
And there may be an opportunity for us down the road, but it's not top priority right now.
I will take that, <UNK>.
There are two things really going on.
One is our plans for the year actually were above our guidance at the beginning of the year.
We now have the confidence to put into our guidance; we feel good about executing that.
We knew we had to perform above our guidance to hit the free cash flow earlier and expected to do that, and now we are within the guidance range.
But in addition to that, we continue to make investments, as you saw in the CapEx numbers, but also in inventory as we roll out initiatives.
The shoe initiative we talked about.
As we go more to open-sell, we expect a very positive consumer response there.
And we bought it that way.
So we are making investments.
<UNK> talked about getting back into stock in the Home store.
We continue to make investments in inventory where we see response or a return on that.
So it's twofold.
One is, we knew it didn't quite add up when we did it to begin with, and now we're up in some of the investments because we have more confidence.
It's a little bit of a complicated set of topics.
First of all, we had to change the mix of Home.
It was two-thirds hard home, one-third soft home.
We've made that transition and we're back to two-thirds soft home, one-third hard home.
That's one.
Second, it was a very modern aesthetic.
Our customer is really pretty much 80% traditional.
That has been changed.
We are trying to make better use of the space.
Space allocation was disguised by a series of shops that make it difficult for the customer to see the whole assortment.
So there are a variety of things including Home is a very promotional category.
So getting back into successful promotions that customers recognize Home as an attraction, those are starting to work for us.
The furniture, mattress, window covering business is a very specialized.
We happen to be very strong in soft window.
That space was diminished during the previous strategy, so we're putting space back into those businesses.
We're using some of the excess space that exists in Home.
It's just taking longer than any of us like.
The good news is that it's trending very well online.
It's also trending very well in the stores that did not receive the major remodels.
As frustrating as it is, because we know the customer likes our products, it's just going to take longer than some of the other categories.
It just doesn't respond as quickly.
We have a strong team there, and they are very motivated to make it an attraction.
We know that people like to come and shop Home while they shop for other categories.
So the fact that we're not as penetrated as we used to be tells you the customer is not ready to return to full spending at this point.
<UNK>, this is <UNK>.
And I will be very honest, it was one of the key questions I had in joining the Company because the conventional wisdom is the business should respond back quickly, just go in and fix the issues.
But I think <UNK> just outlined the complexity of getting the business back to where it should be so it resonates with the customers.
What I can tell you is that the other complex part is, as you start to fix the business, then you have to forecast the sales trends.
And that's key because you have to buy into the inventory effectively.
In my prepared comments, I talked about one of the key initiatives in Home is simply getting back in stock.
And part of that is because the complexity of solving the problem, getting the assortment correct, getting the right brands, the right prices, and then predicting the sales so that you can make the proper buys.
And, as you know, these are not short lead time purchases.
All of those things have added to the complexity.
But the good news is, is that it was one of our best growth categories for the quarter.
We have a really good team in place.
We are continuing to add talent in that area, and we really believe we are headed in the right direction.
The key component to Home ---+ one of the keys, I should say ---+ is the dot-com business and the omnichannel piece because, you have to realize, Home was significantly penetrated online pre the strategy that took it in the wrong direction.
It's still significantly penetrated, and that's going to only grow.
But we think the combination of dot-com, in store, omnichannel, is going to help us get it back on track in the near future.
Thank you for joining the call.
As you can tell, we're quite pleased to be able to shift gears and move into growing the business.
The team is very motivated.
Our engagement scores for our associates are up double digits over a year ago.
And our customer experience scores are up 48 points on every metric.
We feel like we're back in business and we're ready to compete.
We offer no excuses for any of the issues in the quarter.
We feel like we executed well, and we look forward to the next few quarters doing even better.
Thanks for joining the call.
