J.C. Penney on Friday said it plans to close between 130 and 140 stores in the next several months, a move that makes it the latest retail stalwart to pull back from the mall amid the rise of online shopping.
The department store giant's latest quarterly results, also released Friday, illustrate its struggle to connect with shoppers: Sales were down 0.7 percent at stores open more than a year. And yet the report also demonstrated that J.C. Penney, unlike department store rivals such as Macy's and Sears, has had improving momentum lately. The company managed to deliver a net profit in 2016, the first time it has done so since 2010.
J.C. Penney's decision to close stores comes as many industry executives and analysts say that old-school chains are "overstored," meaning they have too many locations for the era of online shopping. Macy's is in the process of closing 100 stores and eliminating some 10,000 jobs. Sears said in January it would close 150 stores, some from its namesake chain, and some from the Kmart chain.
Marvin Ellison, the company's chief executive, said in a statement that J.C. Penney is slashing stores because "we believe we must take aggressive action to better align our retail operations for sustainable growth."
The company is set to disclose in mid-March which locations it is to shut down. J.C. Penney said the affected stores account for less than 5 percent of total sales. It expects the closures will result in $200 million of annual cost savings.
It is not clear exactly how many jobs will be affected by the closures. The company says it will offer a voluntary early retirement package to 6,000 employees. J.C. Penney expects it will not end up reducing its overall employee head count, because, Ellison said, the "number of full-time associates expected to take advantage of the early retirement incentive will far exceed the number of full-time positions affected by the store closures."
In addition to trimming its store portfolio, J.C. Penney plans to close two distribution facilities.
Under Ellison, J.C. Penney has made significant progress, pulling back from the abyss it teetered on under the leadership of Ron Johnson, an earlier chief executive who drove customers away with his strategy of getting rid of promotional pricing. Ellison has been pushing the company to expand its plus-size offering, delve deeper into the home business, and slash costs.
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