J.C. Penney banking on more teen market share

By Alexandria Sage

SAN FRANCISCO (Reuters) - J.C. Penney Co Inc (JCP.N) is banking on fashion variety and price to spice up back-to-school sales to middle America as the retailer's top customers shop for bargains in hard times.

The period is Penney's second-largest sales season behind Christmas, and company executives say teens and their parents will come back to the malls if fashions and prices are compelling.

"I think we're well positioned for back-to-school even though the total economy is a challenge," Mike Boylson, J.C. Penney's chief marketing officer, told Reuters. "We still believe that there is a big opportunity to gain market share because there is still a lot of money being spent out there we can get."

The back-to-school season comes as Penney's base of middle-income shoppers have been cutting back on spending in the wake of the economic downturn.

Sales at stores open at least a year, a key measure of retail performance known as same-store sales, have declined every month since November.

Profit fell by 50 percent in Penney's most recent quarter and Chief Executive Myron Ullman has said 2008 would be "very challenging for the American consumer."

Moreover, the teen market as a whole has been struggling. Once-immune retailers like Abercrombie & Fitch (ANF.N) or American Eagle Outfitters (AEO.N) have seen falling same-store sales this year, and a lack of compelling young women's merchandise has kept some shoppers away.

Nevertheless, teens want new clothes for the start of the school year, and Penney's dual strategy is to offer styles that teens will covet and that won't strain their parents' wallets.