JCPenney looks to cash in on Christmas catalog nostalgia with in-store toy shops

America’s top retailers in trouble

Department stores may be limping along, but one legacy retailer is hoping it’s found a lifeline: Toys.

JCPenney announced on Thursday that it plans to open toy shops inside all of its brick-and-mortar locations.

The idea is to cash in on nostalgia. JCPenney has a "history of selling sought-after toys in our early Christmas catalogs," company executive John Tighe said in a statement.

The company quietly tested out a bolstered toy selection in its stores last holiday season and was "extremely pleased" with the response, Tighe said. That lead to the decision to give toys a larger store footprint all year long.

"We know that shoppers buy toys year-round and by creating a fun, inviting toy shop, with some of the biggest brands and hottest products, we will entice families to shop and spend more at JCPenney," Tighe said.

The announcement comes four months after the company finalized plans to shutter 138 of its stores — leaving fewer than 1,000 locations open.

JCPenney and many other brick-and-mortar retailers have struggled to compete with e-commerce powerhouses like Amazon (AMZN, Tech30) and fast fashion retailers, such as Forever 21 or H&Mwhich have curried more favor with younger shoppers.

JCPenney’s stock price has dropped 40% over the past year. But investors appeared to cheer JCPenney’s stock on Thursday, driving it up nearly 8% during trading hours.

The shops will be located in the children’s department and many will have an area where kids can play with select toys, the company said.

Shoppers will be able to find an "extensive selection of toys for kids of all ages including dolls, action figures, racing cars, arts and crafts, board games, plushes and learning sets," JCPenney said.

In addition to the new in-store toy shops, JCPenney says it has doubled its toy selection online and plans to grow its inventory even more before the 2017 holiday season.

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