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Loblaw’s Joe Fresh hooks up with J.C. Penney

Tags: Loblaw, Retail

Joe Fresh Style is getting a break in the crucial U.S. retail market.

Next spring, the apparel line, owned by grocer Loblaw Cos. Ltd. (L-T), will move into about 700 in-store shops at department-store retailer J.C. Penney as part of the U.S. chain’s massive attempt under a new leader -- a former Apple executive -- to turn around the troubled company.

For Joe Fresh, under the direction of fashion guru Joe Mimran, it’s an opportunity to get its styles into a well-known U.S. retailer and gain recognition among U.S. consumers. Last year, Joe Fresh started to open standalone stores in the United States, a first step to a plan to go worldwide with the Canadian brand.

Joe Fresh has been a strong performer for Loblaw, helping the country’s largest grocer bolster its often challenged results. The brand has been ranked the top apparel label in Canada in both units and dollars, according to May data from market researcher NPD.

“We are extremely proud to partner with one of America’s most iconic department stores, especially as they embark on a retail transformation headed by visionary CEO Ron Johnson,” Mimran, creative director of Joe Fresh, said on Wednesday.

Still, while Joe Fresh has generated gains for Loblaw in the past, the fashion line’s sales were flat in the second quarter, the company said. Vicente Trius, the new president of Loblaw, told an analyst conference call on Wednesday that sales in the Canadian apparel industry overall dropped in the quarter. So relative to the market’s weakness, the Joe Fresh performance was doing well, he suggested.

He said the four-year deal with J.C. Penney carries limited financial risk for Loblaw and requires no fresh capital investment, just perhaps a few people to manage the wholesale business. It will be accretive from the start, he said. “We see it as promising.”

Sarah Davis, chief financial officer at Loblaw, added that shareholders don’t need to worry about an eventual write down for Joe Fresh inventory tied to J. C. Penney

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