2017 has continued to be a horrendous year for retail, and we’re only three months in. As stores continue to suffer from results of over expansion and plunging sales, many companies have been forced to shut their doors. For some, it is a Hail Mary to keep the company financially sound. For others, it’s the final nail in the coffin as they are ushered into bankruptcy.
Two iconic American retailers, J.C. Penney and RadioShack, have been in the crosshairs of slowing customer traffic and declining sales for years. It was announced this week that between the two companies a total of almost 700 stores would be closing over the next few months.
JC Penney is set to close 138 stores in an effort to cut costs and grow sales at its strongest locations. According to CNBC, the closures highlight the pressures on traditional department stores, which are losing market share to off-price competitors and Amazon. They also underscore the deteriorating economics at lower-quality shopping centers, whose risk of failure rises when an anchor tenant exits.
Most of its closures would occur in the second quarter, while liquidations will start April 17. Around 5,000 jobs are in jeopardy due to the closings. Initially, Penney’s said it would provide 6,000 employees with voluntary early retirement programs depending on their age and tenure. Those employees have until the end of this month to decide if they will accept the package. Penney’s will also try to relocate some store leaders to better performing stores as well as provide outplacement support services for eligible workers.
In addition to its store closures, Penney’s is shutting down one supply chain facility in Lakeland, Florida, and relocating another in Buena Park, California. The full list of stores closing can be found on the J.C. Penney website.
RadioShack, which filed for its second bankruptcy in two years, announced they would be closing 552 of their stores. This will affect roughly 36% of their total stores and leave around 1,000 stores to remain open. The stores closing are said to have the “lowest sales velocity and highest rent,” according to the court filing. Per Business Insider the closures will occur in two waves, with 187 closing immediately and another 365 closing by the first week of April.
As this bleak retail climate continues to claim victims only time will tell who will be next on the chopping block.