Department store retailer J.C. Penney will close as many as 140 locations as part of a plan to return the company to profitability.
In addition to the store closures, the company said it would also shutter two distribution facilities.
Officials with the Plano, TX-based retailer made public the decision to close stores the same day its announced quarterly and full-year fiscal results. In the all-important fourth quarter ending January 28, which includes the holiday season, the company reported slight declines in net sales and comparable store sales.
As for the store closures, J.C. Penney officials said the moves would help align the company’s brick-and-mortar presence with its omnichannel network, allowing the company to redirect capital resources to invest in locations and initiatives that offer the greatest revenue potential.
“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 Ellison, chairman and CEO of J.C. Penney. “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.”
Ellison said he believes the store closures will also allow the company to adjust its business to compete against the “growing threat” of online retailers.
The total store closures represent approximately 13% to 14% of the company’s current store portfolio, but less than 5% of total annual sales, less than 2% of EBITDA and 0% of net income, according to J.C. Penney.
In addition, the company’s financial results were a mixed bag. While net sales for the fourth quarter and fiscal year were down 0.9% and 0.6% respectively, J.C. Penney’s fourth quarter net income was $192 million, up from a net loss of $131 million in the previous year’s fourth quarter. Diluted earnings per share in the quarter were $0.61 compared with a loss of $0.43 in the prior year.
J.C. Penney’s closures are the latest move by a leading retailer to trim overall store count in an effort to improve its financial standing. In January, Macy’s said it would shut 68 locations and Sears Holdings the same month announced plans to close 150 stores (109 Kmart, 41 Sears).