Company - - Feb 25,2017
Imitating the rivals, J.C. Penney to save $200 million by cutting down its store count and offering early retirement plan in an era of online shopping.
J.C. Penney plans to close about 140 stores and also offer early retirement to its 6,000 full-time employees as the department-store industry faces stiff competition from adept local retailers and online sellers.
The Company would close down between 13 to 14 percent of its stores and also bring new products and services including beauty products, toys, home goods and appliances, keeping in mind that majority of its customers are women and have their own homes.
The closings of stores would take place by the end of June this year. The locations will be announced by mid-March. JCPenney will also shutter two distribution centers. JCPenney had 105,000 employees managing 1,021 stores as of last year.
JCPenney is not the only departmental chain closing its stores. Earlier Sears Holdings, which includes the Sears and Kmart brands, had announced plans to shutter 150 stores last month, and Macy's has closed 68 stores and cutting down 10,000 jobs.
The Limited, an American clothing company filed for bankruptcy for the second time last year, is expected to close all 250 stores, cutting 4,000 jobs. Sports Authority closed its business after filing for bankruptcy protection last year.
The company expects to save around $200 million in payroll and other costs by closing the stores. However, JCPenney would spend another $225 million to cover the expenditure of closing the stores. JCPenney said stores to be closed had weaker sales or would have required costly upgrades.
JCPenney also said during a crucial holiday season sales at its outlets dropped 0.7% in the fourth quarter of 2016.
Overall, net sales dropped 0.9% to $3.96 billion, while the company’s finances improved from a loss of $131 million in 2015 to net income of $192 million in 2016.
JCPenney’s stock dropped 4.8% to $6.53 on 23 Feb.