Hammered by internet, United States chain closing 140 stores

Andrew Cummings
February 25, 2017

Despite announcing a positive net income for 2016, J.C. Penney announced Friday that it would be shuttering 130 to 140 of its stores in the coming months.

"We believe we must take aggressive action to better align our retail operations for sustainable growth", J.C. Penney's chairman and chief executive officer, Marvin Ellison, said in statement.

The stores will shut down in the second quarter of 2017.

JCPenney projects it will close a distribution center in Lakeland, Fla.in June.

According to the company's press release, the stores identified for closure will be locations that have minimal cash flow or will require the most significant amount of money to meet the new standard.

The store closures make up 13-14% of its total brick-and-mortar locations, while the 6,000 workers who will be offered buyouts include those in the retail, supply chain, and corporate departments.

The usually lucrative holiday period proved troublesome for many retailers this year, with sales at Penney's established stores down 0.7 percent.

Penney's expects the shutdowns will cost an initial $225 million in broken leases, writeoffs and "transition costs", and then save the company $200 million a year. Rimrock Mall spokesman Daron Olson said officials from J.C. Penney did not contact anyone at Rimrock Friday about the closures. The Queensbury store was recently renovated, with a Sephora cosmetics shop added.

The company said a list of affected stores will be released next month, after it notifies its employees.

Yet unlike other retailers, J.C. Penney also delivered a net profit in 2016, the first time since 2010, of $1 million.

Employees in the company's pension program who are at least 55 years of age with 15 years of service as of January 31 are eligible for early retirement.

The company also said the store closings will allow it to adjust the business to better compete with online retailers. The Macy's, which opened in 1981, employs 69 sales associates, and is slated to close sometime later this year. Analysts surveyed by Thompson Reuters expect a profit of 61 cents a share and a sales decline of 0.4 percent to $3.98 billion.

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