Penney Feels The Pinch: J.C. Penney To Shut Stores, Layoff 2,000 Workers
Fast on the heels of Macy’s announcing store closings and layoffs comes word that J.C. Penney is planning to do the same. But while Macy’s has seen its stock and revenue go up recently, J.C. Penney has been struggling financially and image wise.
The retail chain has announced it will shut 33 failing stores by May and lay off 2,000 employees. “Penney’s closings represent 3 percent of its 1,100 locations. The layoffs will affect 1.7 percent of the chain’s 116,000 employees,” reports USA Today.
According to the company, the move will save $65 million annually.
Most are not surprised Penney will be making cuts. The store’s stock has been underperforming. After the store closings were announcement, shares dropped 8 cents to $6.93 in after-hours trading, after gaining 8 cents to close regular trading at $7.01, reports CBS News. Since February 2012, J.C. Penney stocks lost 84 percent of their value. In order to get back to profitability, the chain had to some downsizing.
“Penney is trying to recover from massive losses and plummeting sales drops that occurred under former CEO Ron Johnson, who was ousted in April after being on the job for 17 months,” reports CBS News. After giving Johnson his walking papers, Penney rehired former CEO Mike Ullman.
And in addition to the announced store closing, Ullman has already made other changes. He brought back the frequent sales events, which Johnson had canceled. And Penney has also put back basic merchandise on the shelves, such as store brands like St. John’s Bay, which Johnson has pulled in order to lure in more affluent shoppers–a strategy that bombed.
“As we continue to progress toward long-term profitable growth, it is necessary to re-examine the financial performance of our store portfolio and adjust our national footprint accordingly,” says company CEO Myron Ullman III.
The closing had been planned, says Penney as it is part of the turnaround plan, which went into effect in April when Ullman returned as CEO. Ullman new strategy has been working. “Sales at stores open at least a year edged up 0.9 percent in October – the first increase since December 2011,” reports CBS News. And last month, Penney announced its revenue at stores opened at least one year had increased 10.1 percent in November.
Among the locations closing are the Selma Mall in Alabama; the Arrow Plaza in Rancho Cucamonga, Calif, and Exton, Pa. at the Exton Square Mall.