J.C. Penney, a struggling retailer recently said that it will close 33 stores around the country and eliminate 2,000 jobs in a bid to restore its fortunes. It will lay off 2,000 employees as the venerable but troubled retailer continues a sweeping turnaround effort.It said the closings will save around $65 million a year beginning in 2014. It will take pretax charges of $17 million in the first quarter and $26 million in the fourth quarter .The remaining inventory at the 33 stores will be sold over the next several months with final closings expected to be completed by May. Eligible associates released from the company will receive benefit packages. The stores are expected to be closed by May. Most of the stores that will close are in smaller cities or in those cities where there may be few other retail alternatives. Salisbury, Bristol and Norfolk in Virginia are among the cities losing a store.
J.C. Penney shares fell from 0.9% to $6.95 in extended trading. The stock collapsed 54% last year, compared with a 30% gain for the Standard & Poor’s 500 Index. The last announcement was the latest move by J.C. Penney to steady its operations after several years of dismal results that helped drive the company’s stock down 60 percent last year. It was then followed by Macy’s announcement last week that it would eliminate 2,500 jobs and reorganize its stores to reduce costs. Retailers have strived through a tough holiday shopping season, and many of them warned that the deep discounts have hurt profits.J.C. Penney focused on beefing up its stock of in-house brands ahead of the holiday season and returned to a strategy of frequent sales and discounts. But it’s too early to say whether those measures succeeded as J.C. Penney has not disclosed its sales data. However it has said that it was pleased with its holiday performance.
In November the company reported its first gain in monthly same-store sales in almost two years amid rising demand for men’s apparel, home products and women’s accessories. Last week, J.C. Penney repeated its forecast that same-store sales would improve in the fourth quarter and that it would have more than $2 billion in liquidity at the end of the period. The company still failed to provide December sales data it had made public the previous three months. J.C Penny chief executive Mike Ullman said in a statement that as they continue to progress toward long-term profitable growth, it becomes necessary to re-examine the financial performance of their store portfolio and adjust their national footprint accordingly. The crucial holiday shopping season is expected to be tough on discount retailers particularly. While high-end retailers such as Neiman Marcus and Tiffany have reported discounters ,strong sales such as Target have lowered their profit estimates.