J.C.Penney to Close 33 Stores, Cut 2,000 Jobs … Retailer sees Annual Savings of About $65 million starting this year
J.C. Penney Co. is planning to close 33 underperforming stores and trim 2,000 positions, moves the department-store retailer said are necessary so it can focus on locations that can generate the strongest profits.
The planned closures come as the retailer is struggling to turn itself around after former Chief Executive Ron Johnson’s failed effort to remake the company by doing away with promotions and eliminating in-house brands.
And while Penney has said customers responded well to its offerings during the latest holiday period, the company still has a lot of ground to make up after sales fell by nearly a third in the holiday quarter of 2012.
Penney on Wednesday said the move to close 33 stores from its base of about 1,100 locations will result in annual savings of about $65 million beginning this year. The closings will result in the elimination of about 2,000 positions, and eligible associates who don’t remain with the company will receive separation benefits packages.
The company expects to incur pretax charges of about $26 million in the fiscal fourth quarter and an additional $17 million in future periods due to the store closures
«As we continue to progress toward long-term profitable growth, it is necessary to re-examine the financial performance of our store portfolio and adjust our national footprint accordingly,» said Chief Executive Mike Ullman III.
A Penney spokeswoman said the decision followed an analysis of store performance at the close of the year, adding that such reviews are commonly done by retailers around this time.
Penney said remaining inventory at the affected stores will be sold «over the next several months,» with final closings to be complete by early May. The store closures don’t affect a plan by the company to open a new store later this year in Brooklyn, N.Y.
Penney’s moves come after rival Macy’s Inc. earlier this month said it was laying off about 2,500 employees as part of a plan to cut costs and generate $100 million in annual savings, which helped Macy’s issue an upbeat profit outlook for the new fiscal year.