J.C. Penney Co., Inc. (NYSE: JCP) intends to close 138 stores nationwide does not include any North Texas locations, the company declared. It announced a list of predicted closures on Friday, which included nine Texas stores. None are positioned in the Dallas-Fort Worth area. In total, the closures will affect approximately 5,000 employees nationwide, with most of the layoffs occurring in June. J.C. Penney (NYSE: JCP) mentioned it is working to reposition the impacted employees within the company and will provide outplacement support services. Most of the affected stores will start liquidating stock on April 17.
J.C. Penney first declared plans to close 130 to 140 stores, or approximately 13 to 14 percent of its fleet, in its fourth quarter and 2016 earnings call in February. During the time, the company mentioned the sites contributed less than 5 percent of annual sales and no profit during the year. Closing the stores is predicted to generate annual savings of almost $200 million. However, J.C. Penney anticipates to earn $225 million in pre-tax charges from the closures during the first half of 2017. Most of the closures are forecasted to occur in the second quarter of 2017.
Company CEO Marvin Ellison first examined store closures in January, saying J.C. Penney’s 1,104-store footprint was too large and that some didn’t meet the company’s “brand standard.” “For the record, I think that 1,014 stores for J.C. Penney is too many, because we haven’t made the necessary investments in our store fleet the way we should,” Ellison said at the time. “It’s a simple question: If we have a location that I wouldn’t want my children to work at, or wouldn’t want my wife to shop at, then we’re going to invest capital and ask if it fits the brand standard.”
In the February earnings call, Ellison added that the closings would permit J.C. Penney to better contend with online retailers while keeping up with brick and mortar rivals. Though it’s thinning down its size, the company is emphasizing on stocking the rest of its locations with high performing merchandise like beauty, special sizes and home brands. It declared earlier this month plans to pilot six home installation services in 100 stores. The services include bathroom remodeling, home heating and cooling systems, quick-ship and installed blinds, home water solutions, awnings and smart home technology.
And Ellison said the retailer is using its stores as fulfillment centers for online orders. In 2016, almost 75 percent of the company’s online orders affected a physical store, including through J.C. Penney’s buy online pick up in store initiative. “It is essential to retain those locations that present the best expression of the J.C. Penney brand and function as a seamless extension of the omnichannel experience through online order fulfillment, same-day pick up, exchanges and returns,” Ellison added.
J.C. Penney combined the announcement of the closings in February with an intended early retirement program for home office, store and supply chain employees who meet criteria centered on age and years of service to the company as of Jan. 31. Approximately 6,000 employees were eligible for the plan, and had to accept by today.
The company also confirmed earlier this month that it had laid off an undisclosed number of employees at its corporate headquarters in connection with the closures. “Since we’ll be operating in fewer locations, it becomes necessary to adjust corporate staff relative to the company’s store portfolio,” J.C. Penney spokesman Joey Thomas said. “Although I don’t have a number available to share, it is part of our normal course of business for leaders to ensure their respective teams are optimally staffed, so any position eliminations would vary by department.”
Additionally, J.C. Penney is closing two distribution facilities in Lakeland, Florida, and Buena Park, California. The Florida facility is predicted to close in early June, with operations transferring to another logistics facility in Atlanta.
The company is already working to its California hub.
The following Texas stores are being closed:
-Athens Village Shopping Center, Athens
-Borger Shopping Plaza, Borger
-Heartland Mall, Early
-El Paso Downtown, El Paso
-Marshall Mall, Marshall
-McAllen Downtown, McAllen
-University Mall, Nacodoches
-King Plaza Shopping Center, Sequin
-Basque River Center, Stephenville