J.C. Penney (NYSE: JCP) said Wednesday it will shutter 33 of its 1,100 stores and slash 2,000 jobs as it scrambles to revive its business. The struggling department-store chain said the move will generate annual savings of roughly $65 million beginning in 2014.
"As we continue to progress toward long-term profitable growth, it is necessary to re-examine the financial performance of our store portfolio and adjust our national footprint accordingly," Penney CEO Mike Ullman said in a statement.
The soon-to-be-shuttered stores will cease operations by early May. Penney expects to incur charges of $26 million in the fourth quarter and $17 million in future periods related to severance and closure expenses.
News of the closings raises concerns about J.C. Penney's holiday season sales, especially since the retailer offered a vague press release about its year-end performance. This latest move is an indication that holiday sales were not what the company hoped for and that the chain is still hustling to recover. After the holiday season, stores typically re-evaluate their store count and make announcements such as this one.
In J.C. Penney's case, the ongoing reset at stores as the initiatives of former CEO Ron Johnson are dismantled are lasting longer and being more disruptive than many anticipated, according to Belus Capital Advisor Brian Sozzi. "There remain pockets of J.C. Penney's sales floor, for example big ticket furniture, that are simply not moving despite increased promotions," he said in a research note. "We continue to believe J.C. Penney will have to undergo a firesale on slow-moving furniture packages to reset the floor space. A return to profitability continues to be pushed out via what's happening in the stores today."
J.C. Penney operates roughly 1,100 stores nationwide and has 116,000 employees. A full list of the store closings can be found here.
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