J.C. Penney is joining its department store rivals in pruning its store base in the era of online shopping.
Plano-based Penney said Friday that it will close 130 to 140 stores as well as two distribution centers in Florida and California over the next several months as it tries to improve profitability. The company said it would also initiate a voluntary early retirement program for about 6,000 eligible employees.
The company plans to release a detailed list of store closures in mid-March after workers have been notified. In Tarrant County, JC Penney has stores at Ridgmar Mall in Fort Worth, North East Mall in Hurst, The Parks at Arlington, Burleson Town Center and Alliance Town Center in north Fort Worth.
The news came as Penney posted a profit for the fourth quarter, compared to a loss a year ago. But total sales were down slightly, and a key revenue metric declined a bit as well. The company issued a conservative annual forecast, sending shares down 9 percent Friday.
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CEO Marvin Ellison acknowledged that Penney wasn’t strategic with promotions, which hurt profit margins, and said its level of couponing was “unhealthy.” It plans to use a more data-driven approach to pricing this year after testing the strategy in some categories last year.
Like other department stores, J.C. Penney is trying to adjust to changing shopping patterns. But it is also still recovering from a catastrophic reinvention plan under a former CEO that sent sales and profits freefalling starting in 2012. Since then, it has focused efforts on its home area, started selling major appliances again and expanded its number of in-store Sephora beauty shops.
While its annual sales still shrunk, what’s encouraging is Penney’s profit picture. Penney was able to pull in a $1 million profit for the full fiscal year, the first time it earned an annual profit since 2010. The stores it is closing represent about 13 percent to 14 percent of its current store count of about 1,000, but less than 5 percent of total annual sales.
“With a slimmed-down store portfolio, (J.C. Penney) will be able to focus on making its remaining stores more of a destination,” said Neil Saunders, managing director of GlobalData Retail. “This is essential, as while progress has been made on categories like home, other departments still require attention.”
Ellison said the company decided that coordinating a voluntary early retirement program with the store closures could lessen the effect on employees. He said the number of full-time workers expected to take advantage of the early retirement incentive will far exceed the number of full-time positions affected by the closures.