J.C. Penny is joining a growing list of brick-and-mortar businesses scaling back operations by closing unprofitable stores that include Sears and K-Mart which announced the closing of 150 stores last month, and Macy's, closing 68 stores and cutting 10,000 jobs, reports CNN Money
An announcement of the list of store closings is expected to be released in March after the stores have been notified, with most of the stores being closed by the end of June this year. J.C. Penny will also close two distribution centers, in Lakeland, Fla. and Buena Park, Calif. The company is also offering a retirement incentive to 6,000 eligible employees, according to the Dallas News.
The affected stores represent about 13 percent of the company's 1,014 stores, but the stores represent less than 5.0 percent of total sales. This move will result in an annual cost savings of $200 million. This move also came about as J.C. Penny posted a profit for the fourth quarter compared to a loss last year.
Recovery from catastrophic reinvention plan
Former CEO Ron Johnson's reinvention of the J.C. Penny brand was a disaster that sent sales and profits spiraling into the basement in 2012-2013. Mike Ullman took the helm after Johnson was pushed out in 2013, managing to stabilize the company.
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. Ellison plans to work on improving sales in stores and online
. He says they were hurt by promotions that weren't as data driven while relying on aggressive coupon promotions. Ellison says there's a better way to do this.
"When we look at the state of the consumer, by every measure, there are no flags for why the consumer would pull back spending. Unemployment is down and wages are up," he said. "And we feel good about where we are going and the things we can control."