The downward spiral of shopping mall stores continues with the latest announcement from JCPenney.
The locations Penney's will shutter represent 13 to 14 percent of its store portfolio but generate less than 5 percent of annual sales.
J.C. Penney's outlook for 2017, including the impact of closing stores, calls for same-store sales to be flat, plus or minus 1%.
Ellison said closing stores will allow the company to compete more effectively amid "the growing threat of online retailers". Comparable sales for the fourth quarter ending January 28 fell 0.7%, compared with a 4.1% increase in the prior period. Home goods, Sephora, salon, and fine jewelry were its top-performing merchandise divisions this past quarter, according to its report.
In addition to the stores, JCPenney will close its Lakeland, Fla., distribution center in early June and is selling its supply chain facility in Buena Park, Calif.
But as the retailer expands its chain of Sephora boutiques, new appliance sections, and upcoming Nike (nke) boutiques, it has chose to concentrate its efforts on stores that can succeed, acknowledging it cannot keep all stores in such a massive fleet up to standard.
The 1-million-square-foot, 24-acre compound at 6031 Orangethorpe Ave., was assessed at roughly $35 million previous year, making it a valuable real estate asset for the troubled retailer. Net sales slipped 0.6% to $12.5 billion on the year. The company plans to save $200 million annually on occupancy and payroll costs, but will take a $225 million pre-tax hit from lease termination fees and impairments in the first half of 2017.
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JC Penney says it's implementing a voluntary early retirement program for around 6,000 eligible employees.
Fourth-quarter profits totaled $192 million, or 61 cents per diluted share, a solid improvement from the comparable period when the company posted a net loss of $131 million, or 43 cents per diluted share.
Nearly all of the stores on the closings list will be shut down sometime between March and June, the company said.
"We understand that closing stores will impact the lives of many hardworking associates, which is why we have made a decision to initiate a voluntary early retirement program for approximately 6,000 eligible associates", he said in a statement. Analysts polled by Zacks expected $3.97 billion in revenue.
JC Penney Expects FY17 Comps At -1% to +1%.
Ellison said the closures will allow the company to raise brand standards as "beauty, home refresh and special sizes generated significant sales".