J.C. Penney Adds Stores J.C. Penney Co. is opening nine new stores across the U.S. this month, including a store in Manteca, Calif. Why is the company choosing to expand during an economic downturn?
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J.C. Penney Adds Stores

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J.C. Penney Adds Stores

J.C. Penney Adds Stores

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Unidentified Man: Okay shall we do this on three? One, two, three.


INSKEEP: Cheer along with them if you like. That's a J.C. Penny store opening. The new store is in central California in a town called Manteca, which is about an hour south of Sacramento. It is one of nine new stores that J.C. Penny opened around the country on the same day. Capital Public Radio's Ben Adler reports on what they say us about the retailer.

KIMBERLY TREET: Good morning, welcome to J.C. Penny's.

BEN ADLER: Kimberly Treet is greeting a constant stream of customers on their way through the doors. This new Manteca Penny store technically opened about a week earlier, but today is grand opening day and Tree says she's feeling the love.

TREET: It's amazing. I had to park on the side of the building because I didn't want to come in the front door. I didn't everybody to think I was line- jumping.


ADLER: Unknown Woman: And thank you for shopping with us today. You have a wonderful afternoon.

ADLER: Sephora is a big reason why Karen Amore and her husband, Randy, are here.

KAREN AMORE: This is the only one in this area, this Sephora's, for quite a - 40 miles?


AMORE: The other thing is, we're set. There are certain things we buy here for probably last 20 years.

ADLER: Well, so much for the recession, right? No. J.C. Penny saw its comparable store sales drop nearly nine percent last month. Better than it's projected 13 percent, but still not exactly pretty. And with the notable exception of Kohl's, whose sales dropped just one-and-a-half percent, other department store chains faired as bad or worse than Penny's.

JERRY HERSHBERG: It's been very difficult for everybody involved in what I would call the middle space.

ADLER: Jerry Hershberg is a credit analyst for Standard & Poor's and he points the store is serving America's middle class.

HERSHBERG: So, people like Penny, Bonton, Dillard's, Macy, they all compete in the middle space and everybody was down at least eight and a half percent.

ADLER: So what explains all the new stores? Well there's a couple of factors. First, these new openings have bidden the pipeline for years. And you can't just pull the plug on them without it costing you. And second, even though some department stores are expanding they're doing so at a much slower rate. Take Penny's for example, they opened 50 stores in 2007 and 35 last year. This year they're only planning 17 and have those just started up. Michael Gaston is the chain senior vice president and director of Property Development.

MICHAEL GASTON: We still believe that there are underserved trade areas and markets throughout the country. But it's fair to say that we've moderated the new store program in 2009 and frankly in 2010 it will be moderated a little bit more to reflect the current challenge in economic environment.

ADLER: Manteca is one of those underserved markets. It's the bedroom community that recently gained a Kohl's as well but just lost the Mervyns. S&P's Jerry Hershberg says Penny's have done a good job improving its merchandize and value, but it's not doing anything unique to handle the recession.

HARSHBERG: So for a reality check and I think we just need to look what's going on in the economy and that was really dictating what's happening with retailers.

ADLER: For NPR News, I'm Ben Adler, in Sacramento.

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