Published: Sat, February 25, 2017
Markets | By Armando Jensen

JCPenney To Close Over 100 Stores

JCPenney To Close Over 100 Stores

The department store retailer announced this morning it will shutter 130-140 stores and two distribution facilities this year under a plan to "optimize its national retail operations as part of the company's successful return to profitability".

JCPenney did say the affected stores represent 13-14 percent of the company's locations, but less than 5 percent of total annual sales. Ellison forecast Penney's online sales will increase to more than 20 percent of its total sales over the next five years, as consumers increase their use of mobile technology. In fact, Home, Sephora, Salon and Fine Jewelry were the company's top performing merchandise divisions during the quarter, while women's apparel was the weakest.

J.C. Penney officials say they expect to release a list of which stores are closing within the next few months.

But as the retailer expands its chain of Sephora boutiques, new appliance sections, and upcoming Nike (nke) boutiques, it has made a decision to concentrate its efforts on stores that can succeed, acknowledging it cannot keep all stores in such a massive fleet up to standard.

Net income in the quarter soared 19.6% to $189 million or $1.42 per diluted share compared to $158 million or $1.14 per share in the same quarter past year. Net sales slipped 0.6% to $12.5 billion on the year. Marvin Ellison has been the CEO since 2015, and under his guidance, the company has finally seen its first profit since 2010, even though it is small. It expects sales at existing stores will be between -1% and 1%.

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The news came as J.C. Penney posted a profit in the fourth-quarter compared to a loss a year ago.

The J.C. Penney Company has announced it will close hundreds of stores and will offer retirement buyouts to thousands of employees.

JC Penney Reports Q4 Adj. EPS $0.64 vs $0.61 Est., Sales $3.96B vs $3.98B Est. Revenue for the quarter was $3.96 billion, just below analysts' projections of $3.98 billion.

Rather than layoffs or firings, an early retirement program is being made available for roughly 6,000 eligible J.C. Penney associates.

"We believe the future winners in retail will be the companies that can create a frictionless interaction between stores and e-commerce", Ellison said, "while leveraging physical locations to minimize the growing operational costs of delivery".

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