J.C. Penney Company will close 130 to 140 stores and two distribution centers during the next several months as it aims to improve profitability in the era of online shopping.
The closures, announced Friday, represent about 13 percent to 14 percent of the Plano-based company's current store count, and less than 5 percent of total annual sales.
Which JCPenney stores will close will be released in mid-March, after all affected staff have been notified. The closures are expected to save the company $200 million per year and are expected to take place in the second quarter of 2017.
In a statement released Friday the company said, "The stores identified for closure either require significant capital to achieve the Company’s new brand standard or are minimally cash flow positive today relative to the Company’s overall consolidated average."
U.S. & World
The day's top national and international news.
While which stores will close remains a mystery, the company did say a distribution center in Lakeland, Florida will be closed and that a supply chain facility in Buena Park, California was being sold "to monetize a lucrative real estate asset."
The news came as JCPenney posted a profit in the fourth-quarter compared to a loss a year ago. The company posted quarterly sales of $3.96 billion, down 0.9 percent from $3.99 billion a year ago.
JCPenney is joining other department stores like Macy's who are shrinking footprints amid challenges in the industry. CEO Marvin R. Ellison mentioned the "threat" that online retail presents in a statement announcing the changes.
"We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers," Ellison said in a statement.
Ellison also announced a voluntary early retirement program that about 6,000 employees are eligible for.
“We understand that closing stores will impact the lives of many hard working associates, which is why we have decided to initiate a voluntary early retirement program for approximately 6,000 eligible associates. By coordinating the timing of these two events, we can expect to see a net increase in hiring as 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,” added Ellison.
Revenue at stores open at least a year was down 0.7 percent. Still, some stores did well, Ellison said.
"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," he said in the statement.