J. C. Penney Company Inc. (NYSE: JCP) is raising the white flag of surrender on some of its operations. Late on Wednesday came word that the struggling department store retail player will take new initiatives to advance its turnaround. That includes store closures, which also means layoffs are coming.
The number of closures was put at 33 stores, labeled as underperforming stores. This will happen fast because the company said that final closings will take place in early May.
If you read on, you may also determine that the effort is simply not enough for a company in its shape. The annual cost savings are put at roughly $65 million. It will take about $26 million in pre-tax charges in the fourth quarter of 2013 and $17 million in future periods.
Some 2,000 jobs will be eliminated as a part of the store closures. Remaining inventory in the stores being closed will be sold over the next several months.
CEO Mike Ullman said that, while it is a difficult decision, this is an important step to address a strategic priority to improve the profitability of the stores and to position the company for future success. Our take is that more closures are going to have to be made if the company cannot fix itself from within.
Many of the places that are being closed you may have never heard of. Also, keep in mind that J.C. Penney operates close to 1,100 stores. A full list of store closures is as follows (state, city, location):
- AL- Selma; Selma Mall
- CA- Rancho Cucamonga; Arrow Plaza
- CO- Colorado Springs; Chapel Hills Mall
- CT- Meriden; Meriden Square
- FL- Leesburg; Lake Square Mall
- FL- Port Richey; Gulf View Square
- IA- Muscatine; Muscatine Mall
- IL- Bloomingdale; Stratford Square Mall
- IL- Forsyth; Hickory Point Mall
- IN- Marion Five Points Mall
- IN- Warsaw Marketplace Shopping Center
- MD- Salisbury; The Centre at Salisbury
- MI- Marquette; Westwood Plaza
- MN- Worthington; Northland Mall
- MS- Gautier; Singing River Mall
- MS- Natchez- Natchez Mall
- MT- Butte; Butte Plaza Shopping Center
- MT- Cut Bank
- NC- Kinston; Vernon Park Mall
- NJ- Burlington; Burlington Center
- NJ- Phillipsburg; Phillipsburg Mall
- OH- Wooster; Wayne Towne Plaza
- PA- Exton; Exton Square Mall
- PA- Hazleton; Laurel Mall
- PA- Washington; Washington Mall
- TN- Chattanooga; Northgate Mall
- VA- Bristol; Bristol Mall
- VA- Norfolk; Military Circle Mall
- WI- Fond Du Lac; Forest Mall
- WI- Janesville; Janesville Mall
- WI- Rhinelander; Lincoln Plaza Center
- WI- Rice Lake; Cedar Mall
- WI- Wausau; Wausau Mall
When Macy’s announced store closers its shares rallied. J.C. Penney shares were down close to 1% after the news was announced. It seems that this is just not enough of an effort to close underperforming stores. It is highly unlikely that the company’s woes are isolated in only 3 out of every 100 locations.