Wednesday January 15th, 2014 - 4:25PM
As part of its turnaround effort, J.C. Penney Co., Inc. announced that it would close 33 under-performing stores across the country in order to focus resources on the company's highest potential growth opportunities. The results of the action will include an annual cost savings of approximately $65 million, beginning in 2014, according to the company.
In connection with this initiative, J.C. Penney expects to incur estimated pre-tax charges of approximately $26 million in the fourth quarter of fiscal 2013 and approximately $17 million in future periods.
The retailer will sell off remaining inventory in the affected stores over the next several months and expects to complete final closings by early May. The closings will result in the elimination of approximately 2,000 jobs. Eligible associates who do not remain with the company will receive separation benefits packages, according to the retailer. Meanwhile, the company is continuing with plans to open a new store location later this year at the Gateway II development in Brooklyn, NY.
"As we continue to progress toward long-term profitable growth, it is necessary to reexamine the financial performance of our store portfolio and adjust our national footprint accordingly," Mike Ullman, III, CEO of J.C. Penney, said in a statement about the closings. "While it's always difficult to make a business decision that impacts our valued customers and associates, this important step addresses a strategic priority to improve the profitability of our stores and position J.C. Penney for future success."