J.C. Penney Company announced Friday (Feb. 24) that it’s gearing up to close 130 to 140 of its 1,000 stores over the next few months and will close two distribution facilities.
In a press release, J.C. Penney said the move is designed to help the company align its brick and mortar presence with its omnichannel network by redirecting its capital resources to invest in retail locations and initiatives that will give it the best potential for revenue growth.
“In 2016, we achieved our $1 billion EBITDA target and delivered a net profit for the first time since 2010; however, we believe we must take aggressive action to better align our retail operations for sustainable growth. During the year, it became evident the stores that could fully execute the company’s growth initiatives of beauty, home refresh and special sizes generated significantly higher sales and a more vibrant in-store shopping environment,” said Marvin R. Ellison, chairman and chief executive officer of J.C. Penney in a statement. “We believe the relevance of our brick and mortar portfolio will be driven by the implementation of these initiatives consistently to a larger percent of our stores. Therefore, our decision to close stores will allow us to raise the overall brand standard of the company and allocate capital more efficiently.” The struggling retailer also said it has initiated a voluntary early retirement program for about 6,000 employees. Many of the store closings are expected to happen in rural areas, J.C. Penney executives told the Wall Street Journal.
J.C. Penney joins a growing list of traditional retailers who have been forced to close physical stores due to lack of sales, particularly during the holiday shopping season. Macy’s is gearing up to shutter 100 stores, and Sears is closing 108 Kmart stores and 42 Sears’ locations. “We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers. It is essential to retain those locations that present the best expression of the J.C. Penney brand and function as a seamless extension of the omnichannel experience through online order fulfillment, same-day pick up, exchanges and returns,” Ellison noted in the same press release.