JC Penney plans to close up to 140 stores. The continuous strength of online shopping weakened department stores such as Macy’s, Kmart, Sears and now JC Penney.
The locations of the stores to close will be released in mid-March. According to USA Today, Penney CEO Marvin Ellison said that during the fourth quarter [which includes the holiday season], sales fell 0.7 percent at stores that were open for at least 12 months. JC Penney has 1,014 stores in the United States and Puerto Rico, and the closing of these stores, and two distribution centers, will save the company $200 million per year.
Despite beating expected earnings per share of 61¢ by 3¢, JC Penney saw a shrink in sales and a drop in stock prices. According to CNBC, the expectation set for revenue was $3.98 billion; they came up with $3.96 billion.
Stocks fell by 9 percent. Manager of GlobalData Retail, Neil Saunders, remarked that even though sales did decline, the decrease was mild and JC Penney is doing well compared to its competitors. Also, Ellison said that closing the stores will help JC Penney alter plans and procedures to catch up with online-shopping.
JC Penney plans to make changes to both employment and merchandise.
According to the Star Tribune, they will offer 6,000 employees an early retirement program. It is expected that many will take the offer, more than the employment loss by the closings, which will lead to an increase in hiring.
The company wants to focus more on appliances rather than clothing. Currently, they would like to add 100 more appliance showrooms. Also, they introduced new installation services, according to USA Today.
On the clothing situation, they want to switch from a focus on women’s business wear to athletic clothing. Departments that have been doing well are fine jewelry, home goods and Sephora beauty products. A possible solution to their current struggle is regional pricing. This would include charging different prices at different stores.
According to the Star Tribune, Ellison said that jcpenney.com has seen some growth. A plus to brick and mortar stores is that online orders can be picked up at the stores.
JC Penney will have to do some strategizing in marketing, merchandise and pricing to get back on track.