J.C. Penney announces 140 stores closing, offers 6,000 early retirement

J.C. Penney has announced the closing of approximately 140 stores over the next few months.

According to this Yahoo report, the company had a terrible holiday season.

Department store operator J.C. Penney Co Inc (JCP.N) said on Friday it would close 130-140 stores over the next few months, and reported a bigger-than-expected drop in same-store sales for the holiday quarter.

Shares of the company were down 2.6 percent in premarket trading on Friday, after initially rising 3 percent.

The company said it would also initiate a voluntary early retirement program for about 6,000 employees from among its home office, stores and supply chain personnel.

J.C. Penney also said it would sell a supply chain facility in Buena Park, California to “monetize a lucrative real estate asset” and close a distribution center in Lakeland, Florida.

J.C. Penney’s store closures come after larger rival Macy’s Inc (M.N) said in November it would shut 100 stores, as department stores struggle with weak demand for apparel and growing competition from online retailers.

“We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers,” Chief Executive Officer Marvin Ellison said in a statement.

The stores being closed were underperforming and represent about 13-14 percent of J.C. Penney’s store base and less than 5 percent of annual sales, the company said.

J.C. Penney said it expected annual savings of about $200 million from the cost-cutting measures, and would take a related pre-tax charge of about $225 million in the first half of the current year.

CNBC also reported:

Along with the stores Penney’s plans to close, it will shutter two distribution centers. The combined closures will help the retailer invest in its better stores, and “raise the overall brand standard of the company,” Ellison said.

The list of impacted stores will be released next month, once sales associates and other staff have been notified. Most of the closures will occur in the second quarter.

“We believe closing stores will allow us to adjust our business to effectively compete against the growth threat of online retailers,” Ellison said.

“During the year, it became evident the stores that could fully execute the company’s growth initiatives of beauty, home refresh and special sizes generated significantly higher sales, and a more vibrant in-store shopping environment,” the CEO said.