J.C. Penney to close up to 140 stores
J.C. Penney will close 130 to 140 stores and become the latest major retailer to announce store closures in order to remain profitable and “compete against the growing threat of online retailers,” the company’s CEO said Friday.
J.C. Penney said it would reveal which stores were closing in mid-March after affected employees were notified. The impacted stores are expected to close in the second quarter of 2017. It will also close two distribution facilities.
J.C. Penney has eight locations in Connecticut, including Danbury, Milford and Trumbull.
The money saved by the closures will be invested into locations “that offer the greatest revenue potential,” the company said in a release.
J.C. Penney CEO Marvin Ellison told investors the company turned a net profit in 2016 for the first time since 2010.
“We believe we must take aggressive action to better align our retail operations for sustainable growth,” Ellison said while reporting the company’s fourth-quarter earnings. “Our decision to close stores will allow us to raise the overall brand standard of the company and allocate capital more efficiently.”
About 6,000 employees will be offered early retirement packages, Ellison said.
Last summer, J.C. Penney reintroduced appliances to its product offerings for the first time in 33 years in an attempt to spur store sales.
Ellison said maintaining brick-and-mortar stores is essential in helping to keep online sale strong.
“We believe the future winners in retail will be the companies that can create a frictionless interaction between stores and e-commerce, while leveraging physical locations to minimize the growing operational costs of delivery,” he said. “In fact, in 2016 approximately 75 percent of all online orders touched a physical store.”
The closures will represent about 14 percent of the company’s stores, but less than 5 percent of annual sales. The company estimates an annual savings of $200 million.
Last year, Macy’s and Sears each announced it would be closing stores. Macy’s is in the process of closing 68 stores with more than 100 total scheduled to be closed. Sears will close 42 stores in addition to 108 of its Kmart locations this year.