The Dallas Morning News

DALLAS – Mike Boylson is convinced that “the stars all line up for J.C. Penney” this time of year.

Everything from denim (Arizona is a $1 billion line) to demographics (63 percent of its customers have children) makes the chain a top destination for back-to-school shoppers, according to Teen Research Unlimited. And just in case it’s not all celestial, Penney’s chief marketing officer (who happens to be the father of five) is stepping up the ad appeal.

He’s engaged attention-grabbing music celebrities to star in back-to-school TV commercials that started Sunday.

Reggaeton star Daddy Yankee sings his “El Truco” in Spanish-language spots, and emerging band Ok Go rocks the screen in 30-second commercials with “Do What You Want.”

Both feature kids in their rooms as the campaign evolves from its successful dancing bubblehead character of the last couple years.

“You don’t know who Daddy Yankee is? That’s OK – your kids know him, and we hope they’ll be impressed that he’s doing J.C. Penney commercials,” Boylson said.

The campaign is integrated under a “You’ve got it all inside” tag line for a seamless message online, at mall events, in magazine ad spreads and award-show sponsorships.

Those sponsorships include Premio Juventud, the largest music award show for the U.S. Hispanic audience, which aired Thursday night on Univision. Penney is also backing the 2006 Teen Choice Awards, which airs Aug. 20, and the MTV Video Music Awards on Aug. 31.

“With five consecutive successful back-to-school campaigns, our biggest challenge is to continue to grow and innovate,” Boylson said. “As we’ve evolved our marketing, we’ve seen competitors copy some of the things we do, so we cannot stand still.”

Penney has owned back-to-school for the last five years. Its sales outpaced the industry in July and August each year – and Boylson is predicting No. 6.

For retailers, the back-to-school season is second in importance only to the November-December holiday season.

Plano, Texas-based Penney’s performance looks even more impressive considering the number of teen specialty chains from Abercrombie & Fitch to Wet Seal that have sprouted in malls since the 1990s, the apparel upgrades at Target and Wal-Mart, and Kohl’s Corp.’s coast-to-coast expansion.

So far, back-to-school signs for the industry are positive.

Weekly chain-store sales posted the first increase in four weeks on a 0.2 percent gain for the week ending July 8, according to the International Council of Shopping Centers and UBS Securities LLC. From the same week last year, it’s up 3 percent as “retailers finally had something to celebrate as customers took advantage of their Fourth of July sales and shopped,” said Michael P. Niemira, the council’s chief economist and director of research.

“As the month unfolds, back-to-school will become an increasingly more important story for retailers as the first wave of shopping begins,” Niemira said. His forecast is for July sales to rise 3 percent to 3.5 percent.

For the first time, Penney is launching a product and specialty shop for boys ages 8-12, licensing X Games-branded apparel from ESPN Consumer Products. Store displays will include an X Games Moto X 20-inch bike and explain how to order it and matching protective gear online.

That kind of new and improved merchandise mix makes a “marketer’s story easier to tell,” Boylson said. “About 50 percent of Americans shop J.C. Penney, and we want to convince more of the other 50 percent to come in and try us out.”

This year, Penney should benefit from the closure of competing stores in about 80 U.S. malls as part of the final phase of Federated Department Stores Inc.’s acquisition of May Department Stores Co.

A.G. Edwards analyst Bob Buchanan said Thursday that Penney’s sales could benefit to the tune of a 1 percentage point increase each month for the rest of this year from the Federated-May conversions.

Penney has put many new systems in place during a five-year turnaround, completed last year, but Buchanan said he’d like to see the chain use them better.

“Inventory turns could be higher,” he said.

Penney turns its store inventory, or sells out of everything, 3.2 times a year. Nordstrom is at 4.7, Kohl’s at 3.7, Federated (Macy’s, Bloomingdales) at 2.7 and Dillard’s at 2.5.

The key measure is one reason Penney is pushing as hard as it can with its marketing message.

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While the retailer has momentum, it will be competing with popular specialty chains in the mall. Some of them – including Gap Inc. – are trying especially hard this year.

Analyst Todd D. Slater of Lazard Capital Markets just visited with Gap management and said in a report Wednesday that he’s encouraged by the Gap brand’s assortment, which boasts improved denim and hoodie products for back to school.

The chain – which seemed unstoppable in the1990s – could take back some lost share, Slater said, “if enough teens in the mall actually cross the Gap’s lease line,” meaning its front door.

Gap needs to get to a tipping point.

And Boylson said that’s what Penney is shooting for with its hip marketing campaign.

“If more teens will accept us, we know Mom’s not hard to sell,” he said. “We’re trying to reach a tipping point.”