J.C. Penney to shut 130-plus stores, offer early retirements

Associated Press

NEW YORK

J.C. Penney is joining its department store rivals in pruning its store numbers in an era of online shopping.

Penney’s said Friday that it will close 130 to 140 stores as well as two distribution centers over the next several months as it tries to improve profitability. The company said that it would also initiate a voluntary early retirement program for about 6,000 eligible employees.

The news came as Penney’s posted a profit for the fourth quarter, compared to a loss a year ago. But total sales were down slightly, and a key revenue metric declined a bit as well. The company issued a conservative annual forecast, sending shares down 9 percent Friday.

CEO Marvin Ellison acknowledged that Penney’s wasn’t strategic with promotions, which hurt profit margins, and said that its level of couponing was “unhealthy.” It plans to use a more data-driven approach to pricing this year after testing the strategy in some categories last year.

Like other department stores, Penney’s is trying to adjust to changing shopping patterns. But it is also still recovering from a catastrophic reinvention plan under a former CEO that sent sales and profits freefalling starting in 2012. Since then, it has focused efforts on its home area, started selling major appliances again and expanded its number of in-store Sephora beauty shops.

While its annual sales still shrunk, what’s encouraging is Penney’s profit picture. Penney’s was able to pull in a $1 million profit for the full fiscal year, the first time it earned an annual profit since 2010. The stores it is closing represent about 13 percent to 14 percent of its current store count of about 1,000, but less than 5 percent of total annual sales.