This morning, JCPenney revealed plans to shutter more than 100 stores, putting it in the unwelcome company of other anchor store stalwarts — like Sears and Macy’s — who have recently begun paring down their retail footprint.
JCPenney announced its plans to “optimize its national retail operations” by closing 130 to 140 stores and two distribution facilities over the next few months in an attempt to improve profitability and focus on online retail competition.
The closing locations, which represent about 13% to 14% of the company’s physical stores, will be announced in mid-March, the retailer said.
Friday’s announcement came at the same time the retailer released its fourth-quarter and full-year earning results, which saw the company’s fourth-quarter sales increased by just 0.7% to $4 billion.
For the full year 2016, JCPenney reported net sales of $12.5 billion compared to $12.6 billion in 2015, a 0.6% % decrease. The two-year viewing of sales was a bit more promising, showing a 4.5% increase for 2016 compared to 2015.
The small increase in fourth-quarter same store sales was also an improvement over third quarter numbers, which saw comparable sales fell 0.8%.
“We are pleased that in the face of a very challenging 2016 retail environment we delivered our first positive net income since 2010,” Marvin Ellison, CEO of JCPenney, said in a statement.
Despite the improvements, the company says that it will continue to work on cutting costs and improving its online presence through the store closures.
“We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers,” Ellison.
Stores that remain open will provide the company with a “competitive advantage” as they offer a “destination” for shoppers. The locations will be used more in the onmichannel experience, allowing customer to complete online order fulfillment, same-day pick up, exchanges, and returned, Ellison notes.
“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,” Ellison continued.
Because the company “understands that closing stores will impact the lives of many hard working associates,” it says it will launch a voluntary early retirement program for about 6,000 employees.
JCPenney says through the program, and the timing of the store closures, it expects to see an increase in hiring as the number of full-time associates taking early retirement will exceed the number of people let go through store closures.
JCPenney, like many other mall department stores, has been struggling for the better part of a decade to keep customers and increase sales.
One struggle was the company’s love of sales, which former CEO Ron Johnson called a “cancer.”
Under Johnson, JCPenney nixed discounts and sales in favor of more high-end designer “boutiques.” The retailer’s sales fell from $17 billion annually to $11 billion, and the company fired more than 40,000 employees.
While Johnson admitted that he may have got the winds of change blowing a little too quickly after he took over in 2012, he maintained that in the long-term the strategy would have paid off.
Since Johnson’s departure, Ellison has worked to turn around the company. He quickly put into place a new strategy that focused on customer service, shorter shipping times, and a more robust online marketplace.
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