J.C. Penney Co. Inc. plans to close two distribution facilities and approximately 130 to 140 stores over the next few months, with details expected to follow in March.
CEO Marvin Ellison said in a statement posted Friday morning that the company believes closing the stores will “allow us to adjust our business to effectively compete against the growing threat of online retailers.”
As part of an effort to streamline store support services, Penney will close a distribution center in Lakeland, Florida, in early June and transfer its operations to the company’s logistics facility in Atlanta. The company is also in the process of selling its supply chain facility in Buena Park, California.
Ellison said that a voluntary early retirement program is being offered to about 6,000 employees.
The company said a list of affected stores will be released next month, after it notifies its employees. Nearly all of the closures are expected to occur in the second quarter.
“These strategic decisions will help align the company’s brick-and-mortar presence with its omnichannel network, thereby redirecting capital resources to invest in locations and initiatives that offer the greatest revenue potential,” Penney’s statement said.
The total store closings represent about 13 to 14 percent of the Penney’s current store portfolio, less than 5 percent of total annual sales, less than 2 percent of EBITDA and zero percent of net income, the retailer said.
“The stores identified for closure either require significant capital to achieve the company’s new brand standard or are minimally cash-flow positive today relative to the company’s overall consolidated average,” Penney said. “Comparable sales performance for the closing stores was significantly below the remaining store base and these stores operate at a much higher expense rate given the lack of productivity. Once cycled, these closures are expected to be net income neutral.”
Penney’s area stores include locations in Danbury and Trumbull in Fairfield County, the Palisades Center in Rockland County, N.Y., as well as several in New York City and on Long Island.