Pressured by the growing threat of online retailers, J.C. Penney Co. Inc. said today that it will shutter between 130 and 140 of its 1,000-plus stores over the next few months and offer early retirement to about 6,000 workers.
For retail, it’s a jungle out there — and it’s getting increasingly difficult for firms to find a way out. JCPenney is the latest to take the store-closure route — joining Macy’s Inc., Sears and others — in hopes of staying above water during retail’s turbulent time.
“We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers,” chairman and CEO Marvin Ellison said in a release today, noting that he plans to focus on holistic omnichannel growth. “Maintaining a large store base gives us a competitive advantage in the evolving retail landscape since our physical stores are a destination for personalized beauty offerings, a broad array of special sizes, affordable private brands and quality home goods and services.”
He added, “It is essential to retain those locations that present the best expression of the JCPenney brand and function as a seamless extension of the omnichannel experience through online order fulfillment, same-day pickup, exchanges and return.”
The company today also announced fourth-quarter and full-year earnings for fiscal year 2016.
JCPenney’s Q4 sales declined less than 1 percent, to $4 billion, which was in line with Wall Street’s forecasts. Full-year sales dipped 0.6 percent, to $12.5 billion. Comps were down 0.7 percent in Q4 and flat for the year.
Fourth-quarter profits totaled $192 million, or 61 cents per diluted share, a solid improvement from the comparable period when the company posted a net loss of $131 million, or 43 cents per diluted share. Adjusted diluted earnings per share, at 64 cents, were 3 cents higher than analysts’ estimates.
Full-year profits were $1 million, or zero cents per diluted share, compared with a net loss of $1.68 last year. Adjusted diluted EPS were 8 cents per share compared with diluted losses per share of $1.03 last year.
Looking ahead, JCPenney predicts that its 2017 comparable store sales growth will range from down 1 percent to up 1 percent, and adjusted EPS are expected to be in the range of 40 cents to 65 cents.
“This year was not without its challenges, particularly in our women’s apparel business, but I am proud this team delivered on our goal to return our company to profitability in 2016,” Ellison said. “This is no small feat when considering the situation a few years ago, but our over 100,000 associates embraced our strategy and came to work each day focused on doing their part to drive this incredible turnaround in profitability.”
As of noon, JCPenney shares were down nearly 9 percent, to $6.26.