J.C. Penney to reduce pace of store openings

The company said Wednesday it now plans 20 new or relocated stores next year, down from the 36 it expects to open in 2008.

Penney had once planned 50 new stores a year through 2011, but backed away from that goal in April, when it set the target of 36 new stores this year.

Penney and other retailers have been slumping as their middle-class customers struggle with higher gasoline prices, a slowing economy and a weak housing market.

Chief Executive Myron E. Ullman III said Wednesday that the Plano-based chain expects next year "to remain very challenging for the American consumer."

Ullman said the company just completed its strategic planning for 2009 and decided to cut capital spending to about $650 million, compared with $1 billion expected this year and $1.2 billion last year.

The reduced store openings will help the company cut capital spending. Penney also will renovate fewer existing stores--10 to 15 next year, down from the 20 it expects to renovate this year. The company had originally planned to refresh 65 stores per year through 2011.

Penney declined to say where it would delay building new stores but said it still planned to open its first store in Manhattan late next year. It believes the store will be the sales leader in the chain. The company didn't say how much the store will cost--a spokeswoman said Penney doesn't disclose property-development figures.

Faith Hope Consolo, a commercial real estate executive in New York who scouted Brooklyn locations for Penney, said developing the New York store could cost $30 million to $40 million, with the developer paying some. Even at that price, she called it a great location--across from the flagship Macy's store.

"I thought it was pretty brilliant not only because it faces Macy's, but because they're new (in Manhattan) and in the right price point for the customer," she said. "I think they'll capture the market by storm."