J.C. Penney to Shutter Up to 140 Stores as Sales Drop

J.C. Penney has been added to the list of retailers in the U.S. that have reduced their size in order to survive the shift to online sales from traditional brick and mortar locations.

The retail chain, which was founded 114 years ago, had avoided any large scale closings despites posting losses for years. However it announced on Friday that it would shutter up to 140 stores of its approximately 1,000 by June.

The retailer said it had offered a voluntary buyout program to over 6,000 employees.

On Friday, Penney posted its first profit for a full year since 2010. However, executives announced that weaker stores were being closed so the company could put more focus on investments for revamping locations in stronger markets.

Penney announced that it would be identifying locations that will close during March, though the company said many of them were small in size and located in rural areas.

The company is now part of a larger group of traditional chains that have announced plans to shutter locations during 2017 after having trouble attracting shoppers during the all-important holiday shopping season as more of them are moving to shopping online.

Macy’s plans to shutter over 100 stores and has explored options for the remainder of its assets in real estate while Sears will close 42 namesake stores and 108 Kmart locations.

Analysts said that hundreds of different department stores would likely be closed, especially in older and weaker malls as business to online retail rivals like Amazon.com and retailers that specialize in off-prices such as TJX Cos.

This week, the parent of Marshall’s and TJ Maxx said it is opening 1,800 stores which is nearly 50% of its current store base.

Penney CEO Marvin Ellison said that the store closing would allow the retailer to adjust business that would effectively compete versus the expanding threat of retailers online.

He added that the remaining stores would give Penney a big advantage as the locations can be used for shipping or picking up orders made online, which minimized the costs of delivery.

During 2016, close to 76% of the online orders for Penney’s touched one of its physical stores.

During 2016, retail sales increased across the board, but online retailers earned most of the expansion. During that year, spending increased by 11% at retailers online and dropped by close to 6% in department stores.

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