As part of its goal to return to profitability, J. C. Penney Co. Inc. unveiled its restructuring plan to close 130-140 JCPenney department stores and two distribution facilities during the next few months.
As part of the plan, 6,000 employees will be offered voluntary early retirement.
The Plano, Texas-based company says these efforts will help align its brick-and-mortar presence with its omnichannel network, thereby redirecting capital resources to invest in locations and initiatives that offer the greatest revenue potential.
Increased Focus on Home Goods
"In 2016, we achieved our $1 billion EBITDA target and delivered a net profit for the first time since 2010; however, we believe we must take aggressive action to better align our retail operations for sustainable growth" said Marvin Ellison, chairman and CEO. "…We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers. Maintaining a large store base gives us a competitive advantage in the evolving retail landscape since our physical stores are a destination for personalized beauty offerings, a broad array of special sizes, affordable private brands and quality home goods and services. It is essential to retain those locations that present the best expression of the JCPenney brand and function as a seamless extension of the omnichannel experience through online order fulfillment, same-day pick up, exchanges and returns," said Ellison.
The department store’s online orders has been growing at “double digits” and in 2016, approximately 75 percent of all online orders touched a physical store. “Even with a reduced store count, JCPenney is competitively positioned to deliver a differentiated department store model that meets the expectations of a digital world with an inspiring, tangible shopping environment," Ellison added.
With the rise of online shopping, other retailers are culling their brick-and-mortar locations. Macy’s announced it will close 100 department stores, as The Gourmet Retailer previously reported. Sears/Kmart will shutter 108 Kmart stores and 42 Sears stores by April, according to the Business Insider.