1. A Closer Look at JC Penney’s
2012 “No Sale” Strategy

2. What happened to JCP in Fiscal 2012?
• In FY 2012, JCP experimented with a controversial “no sale” strategy and
implemented “always low” pricing across its stores & website
– At the same time, JCP’s immediate comps (Macy’s, Kohl’s, Target &
Sears) continued to offer more traditional sale and coupon strategies
throughout the year
• Financially, the “no sale” strategy was not successful for JCP
– Year over year, JCP’s revenue and gross margin (as % revenue) declined
in every quarter
– Macy’s, Kohl’s, Sears & Target generally experienced yoy revenue growth
• We reviewed JCP’s and its competitors’ digital marketing strategies; we
found some meaningful differences & opportunities for JCP
– Year over year (March), JCP has demonstrated no growth in unique
website visits(1)
• Its direct comps experienced +10% to +22% growth over the same
period(1)
– Recently, roughly 10% of JCP’s traffic has come from emails & social(2)
• JCP’s comps appeared to perform better on Pinterest(2)
2
Notes:
(1) Source: Compete.com
(2) Source: SimiliarWeb

3. On 2/1/12 (the start of FQ1 2012), JCP announced its “fair
and square” pricing model to consumers via general
marketing emails
3

4. JCP emphasized its no coupon / no sale message in marketing
emails through FQ3 2012; however, by Holiday 2012, we
began to observe widespread promo codes and sales
4
FQ1 – FQ3 FQ4

5. During FY 2012, JCP’s share price consistently &
significantly underperformed comps
5
Notes:
(1) Source: Edgar & Google Finance
(2) Indexed to 1/30/12 (first trading day of FQ1 2012)
0
20
40
60
80
100
120
140
160
180
200
$perShare(indexedto100on1/30/12)
Historical Share Price Performance(1)(2)
Sears
Target
Macy's
JC Penney
Kohl's
FQ1 FQ2 FQ3 FQ4
+7%
+37%
+27%
(67)%
+2%

6. JCP’s revenue was down every quarter yoy; while its
comps generally outperformed yoy, particularly in
FQ4
6
Notes:
(1) Source: Edgar & SEC filings
(2) Macy’s Fiscal Q2 ended on 7/30/12; all others Fiscal Q2 ended 7/28/12
$3.9 $3.9 $4.0
$5.4
$3.2 $3.0 $2.9
$3.9
$5.9 $5.9 $5.9
$8.7
$6.1 $6.1 $6.1
$9.4$9.5
$10.1
$9.4
$12.5
$9.3 $9.5
$8.9
$12.3
$15.9 $16.2 $16.4
$21.3
$16.9 $16.8 $16.9
$22.7
$4.2 $4.2 $4.4
$6.0
$4.2 $4.2 $4.5
$6.3
$0
$5
$10
$15
$20
$25
FQ1 2011 FQ2 2011 FQ3 2011 FQ4 2011 FQ1 2012 FQ2 2012 FQ3 2012 FQ4 2012
Fiscal 2012 Revenue ($Bn)(1)(2)
JC Penney
Macy's
Sears
Target
Kohl's

7. Macy’s, Sears & Target maintained yoy gross margin in
FY2012, while JCP experienced declines in every
quarter
7
Notes:
(1) Source: Edgr & SEC filings
(2) Macy’s Fiscal Q2 ended on 7/30/12; all others Fiscal Q2 ended 7/28/12
40.5%
38.3%
37.4%
30.2%
37.6%
33.2%
32.5%
23.8%
39.1%
41.8%
39.4%
41.0%
38.8%
41.9%
39.6%
40.6%
26.7%
25.7% 25.5%
24.5%
27.7%
26.7%
25.4%
25.8%
32.0%
33.1%
31.9%
29.6%
31.6%
32.7%
31.7%
28.9%
38.1%
40.7%
38.6%
36.2% 35.9%
39.1%
38.1%
33.3%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
FQ1 2011 FQ2 2011 FQ3 2011 FQ4 2011 FQ1 2012 FQ2 2012 FQ3 2012 FQ4 2012
Fiscal 2012 Gross Margin(1)(2)
JC Penney
Macy's
Sears
Target
Kohl's

8. In FQ2 and FQ3, JCP offered only a handful of sales, including:
month-long 20-30% off swim, men’s shorts & polos, general
clearance, and free family photo & kids’ haircuts
8
Notes:
(1) Source: Hipiti SaleTally database; sale information collected from retailers’ general marketing emails, web landing pages &
twitter feeds
(2) If same sale spans more than one period, it is counted as unique in each period
4 3
20
180
134
122
181
288
255
207 205
66
60
52
57
0
50
100
150
200
250
300
FQ1 2012 FQ2 2012 FQ3 2012 FQ4 2012
Count of Unique Advertised Sales(1)(2)
JC Penney
Macy's
Sears
Target

9. We observed JCP return to more widespread use of sales & promo
codes in FQ4 (leading up to Holiday); FQ4 rev was +33% greater
than FQ3 2012, but still (28)% less than FQ4 2011
9
Notes:
(1) Source: Hipiti SaleTally database; sale information collected from retailers’ general marketing emails, web landing pages &
twitter feeds
(2) % Sale Days in Period defined as = Unique Sale Days / Days in Period (% of days that offered at least one observed sale)
40%
32%
92%
98%
91%
98% 98%99% 98%
100% 100%
78%
88%
96%
93%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FQ1 2012 FQ2 2012 FQ3 2012 FQ4 2012
% Sale Days in Period(1)(2)
JC Penney
Macy's
Sears
Target

10. During FY 2012, JCP averaged 0.6x sales per day, while
Macy’s, Sears, Target averaged 7.2x, 11.0x and 3.3x sales
per day, respectively
10
Notes:
(1) Source: Hipiti SaleTally database; sale information collected from retailers’ general marketing emails, web landing pages &
twitter feeds
(2) Average sales per day defined as: Total Sale Days / Days in Period
0.4x 0.3x
1.5x
9.1x
6.6x 6.5x 6.5x
14.1x
9.6x
9.2x
11.2x
3.6x 3.5x
3.0x 3.1x
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
FQ1 2012 FQ2 2012 FQ3 2012 FQ4 2012
Average Advertised Sales per Day(1)(2)
JC Penney
Macy's
Sears
Target

11. Our web traffic network analysis suggests there are 2-way relationships
between JCP and Macy’s, Sears & Kohl’s, and a 1-way relationship
where shoppers who visit Target also visit JCP(1)(2)
11
Notes:
(1) Source: Hipiti.com, SimilarWeb. We looked at who hipiti.com users mutually follow and the top website visits by shoppers who
visit a given site
(2) 2-way relationship defined as: shoppers who visit Macy’s visit Kohl’s and vice-versa. 1-way relationship defined as: shoppers
who visit Target also tend to visit JCP, but we do not observe the relationship the other way

12. March yoy, all of JCP’s comps experienced meaningful
growth in unique website visitors; while JCP was estimated
to be flat
12
Note:
(1) Source: Compete.com
0
10
20
30
40
50
60
70
3/2012 4/2012 5/2012 6/2012 7/2012 8/2012 9/2012 10/2012 11/2012 12/2012 1/2013 2/2013 3/2013
Millions
Estimated Unique Visitors: US Only, Web & Mobile(1)
Sears.com
Target.com
Macys.com
jcpenney.com
kohls.com+10%
+22%
+12%
0%
+10%
FQ1 FQ2 FQ3 FQ4

13. Majority of JCP’s web traffic was driven by Direct & Search;
Email & Social accounted for ~10% of total traffic. This is
in-line with Macy’s & Kohl’s
13
0.8%
0.5%
0.8%
1.0% 0.5%
8.6% 6.3%
4.0%
8.3% 10.3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
jcpenney.com Sears.com Target.com Macys.com kohls.com
%TotalTraffic
Web Traffic by Source: Last 3 Months(1)(2)
Display Ads
Mail
Social
Search
Referrals
Direct
Note:
(1) Source: SimiliarWeb, Compete.com, Quantcast.com
(2) Last 3 months since Early April 2013

14. 35.3%
64.0%
41.3%
65.8% 68.0%
43.4%
18.6%
40.6%
16.8% 10.1%
2.3%
2.6% 3.6% 4.9%
6.1%
10.0%
5.3% 5.7% 3.1%
4.0%
9.1% 9.4% 8.8% 9.5% 11.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
jcpenney.com Sears.com Target.com Macys.com kohls.com
%TotalSocialTraffic
Social Web Traffic by Source: Last 3 Months
Other
Reddit
Pinterest
YouTube
Facebook
Majority of JCP’s social web traffic was driven by YouTube and
Facebook; JCP appears to have an opportunity in Pinterest – JCP’s
comps drive a greater % of traffic from that network
14
Note:
(1) Source: SimiliarWeb, Compete.com, Quantcast.com
(2) Last 3 months since Early April 2013

15. 15
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as Hipiti and SaleTally (the “Company”) and were prepared exclusively
for the benefit and internal use of the recipient. Neither the printed
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without the prior written consent of Katkar Flink Corporation.
The analyses contained herein rely upon information obtained from public
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