The month after Christmas was a mixed bag for retailer J.C. Penney. While it reported that its holiday sales were better than expected in December, the company also announced Thursday (Dec. 8) that it would be shutting down 40 stores.
The news of the successful month sent its stock up 20 percent Tuesday (Jan. 6), providing a positive outlook into the start of sales reports from retailers. By Thursday, however, its stock was down 2 percent and J.C. Penney said 2015 will include closing nearly 4 percent of its 1,060 stores.
“As with most retailers, we continually evaluate our store portfolio to determine whether there’s a need to close or relocate underperforming stores,” company spokesman Joey Thomas said. “Reviews such as these are essential in meeting our long-term goals for future company growth. While it’s never an easy decision to close stores, especially due to the impact on our valued associates and customers, we feel this is a necessary business decision.”
Once final holiday and annual sales numbers come in, Belus Capital Advisors analyst Brian Sozzi said he expects more retailers will announce store closings across the country, as more companies are focusing on their online presence. For J.C. Penney’s December report, sales rose 3.7 percent, according to The Wall Street Journal, which reported that was slightly higher than the 3.1 percent growth the retailer saw last December. Fourth-quarter sales growth estimates for the company are anticipated to hit between 2-4 percent.
“Our highest priority over the last year has been to restore profitable sales growth at J.C. Penney,” CEO Myron Ullman said. “This holiday season was instrumental in that effort.”
Overall, the National Retailer Federation is forecasting that holiday sales should be the strongest since 2011 with an anticipated growth of 4.1 percent from November and December sales. But that’s still below the 4.8 percent increase seen in 2011. Unemployment rates declining, economic growth and decreasing gas prices have all been reasons cited for increased consumer spending. Retail was expected to gain momentum each week of December, according to the International Council of Shopping Centers.