Business

J.C. Penney CEO: More store closings coming

J.C. Penney CEO Marvin Ellison discusses the retail business with real estate expert Herb Weitzman on Wednesday at the Bush Center in Dallas.
J.C. Penney CEO Marvin Ellison discusses the retail business with real estate expert Herb Weitzman on Wednesday at the Bush Center in Dallas. Courtesy of Weitzman

J.C. Penney CEO Marvin Ellison said Wednesday that the company is planning to close some of its 1,014 stores soon.

“We’re going through an analysis now,” Ellison said. “We have certain locations that we readily admit we have to downsize.”

Ellison’s comment comes a week after Macy’s said it will close 68 of its 730 stores. Mall apparel chain The Limited also closed stores, and Wal-Mart is expected to report corporate layoffs in Bentonville, sources told CNBC and The Wall Street Journal on Tuesday.

Ellison, speaking at the Bush Center in Dallas in a question-and-answer session with North Texas real estate veteran Herb Weitzman, did not say how many stores would close this year. Last year, Plano-based Penney closed seven stores, mostly in smaller markets.

Store closings that result in job losses, Ellison said, are the hardest decisions and the only ones that give him “sleepless nights.”

“But there are some smaller-market locations where we have to decide, does the mall or our store meet our brand standards?” he said. “If I wouldn’t want my children to work there or my wife to shop there, then we need to create standards with our mall partners to spend capital.”

Still, Penney’s stores remain a key part of its online business because shipping costs continue to rise. Buy-online-and-pick-up-in-store transactions and merchandise returns in stores help alleviate shipping costs. Penney added those capabilities to its stores last year.

“Brick-and-mortar continues to be the future,” Ellison said. “That’s why five years ago the same people who were saying stores will be extinct are now looking at how fast they can open brick-and-mortar stores.”

Higher shipping costs are behind that, he said. About 40 percent of Penney customers who come in for their online pickups and returns spend more money in the stores, he said.

Ellison also had a couple of suggestions for mall operators.

All mall retail tenants are trying to use their stores to make their online business more efficient, but they’re all doing it differently.

He thinks they could help by consolidating shipping for its stores. Daily orders are going out to same neighborhoods every day, Ellison said. “We have to work together to compete with the pure plays.”

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