US-based department store chain JCPenney has announced it plans to close around 27 stores as the comparable sales performance for these locations was significantly below the remaining store base.
The company will close 18 full-line stores including the three previously announced locations, and a further nine ancillary home and furniture stores.
JCPenney noted that the 27 stores under closure either require significant capital, are minimally cash flow positive. They are also operating at a higher expense rate given the lack of productivity.
This move will allow the company to further align its brick-and-mortar presence with its omnichannel network, as well as allow it to reallocate capital resources to locations and initiatives to achieve long-term growth.
The retailer expects to close all impacted stores in the second quarter (Q2) of this year.
In addition, the company is planning to offer separation benefits such as assistance in identifying other employment opportunities and outplacement services to employees impacted by the store closures.
JCPenney also expects to record an estimated pre-tax charge of approximately $15m during the first half of this year, primarily relating to non-cash asset impairments and transition costs as part of the store closures.
Commenting on the company’s future plans, JCPenney CEO Jill Soltau said: “As we forge a path to sustainable profitable growth, our decisions included eliminating non-core and low gross margin product categories, significantly reducing unproductive inventory and continuing the revitalisation of our women’s apparel business.
“While we are pleased with these actions, we know we need to move faster to re-establish the fundamentals of retail, build capabilities focused on satisfying our customers’ wants and needs and ensure that our digital and store operations operate seamlessly to provide an experience that wins with customers.
“We have much work to do to position JCPenney for success and create long-term value for our shareholders, however our unwavering focus and discipline is already enabling meaningful progress.”
JCPenney currently operates more than 860 stores across the US and Puerto Rico. It also operates an e-commerce platform.