Long-popular retailer J.C. Penney has just announced the plan to close between 130 and 140 stores in the next few months. According to J.C. Penney Chief Executive Officer Marvin Ellison, the company believes that this effort will allow them to adjust the business “to effectively compete against the growing threat of online retailers.”
Primarily, the company has plans to be more competitive in the online world. Competing in the growing digital arena is important for all retailers, of course, with Amazon quickly gaining in the industry and Wal-Mart also making the shift. As such, J.C. Penney is even equipping store associates with mobile devices in order to check out online shoppers who have come to the physical store to pick up their order.
In addition, the company has also said it is launching a voluntary early retirement program that will loosen roughly 6,000 eligible employees from the full-time payroll. In all, then, J.C. Penney said it expects to save roughly $200 million, annually. As such, the company will release a list of all the stores slated for closing, some time in March, with all closing expected by the end of the second quarter of this year.
“With a slimmed-down store portfolio, [J.C. Penney] will be able to focus on making its remaining stores more of a destination,” explains Neil Saunders, who is the managing director for retail research firm GlobalData Retail. “This is essential, as while progress has been made on categories like home, other departments still require attention.”
It is an important move for the company, not only in terms of saving money but in terms of benefiting shareholders. With its lowest 52-week report ever, shares of J.C. Penney stock actually traded up as much as 2.5 percent in premarket moves on Friday only to fall 10 percent, at $6.18. The current price is, in fact, a 52-week low of $6.35, which is nearly half of the 52-week high of $11.99
But even with the savings, and in nearly the same breath as the closure announcement, Ellison made sure to reinforce the sustained importance of brick-and-mortar stores as part of the company’s long term strategy.
Ellison goes on to say, “Maintaining a large store base gives us a competitive advantage in the evolving retail landscape since our physical stores are a destination. It is essential to retain those locations that present the best expression of the J.C. Penney brand.”