JC Penney Closing 33 Stores At Cost Of 2,000 Jobs

 
on January 15 2014 6:54 PM

NEW YORK (Reuters) -- J.C. Penney Co. Inc. (NYSE:JCP) said Wednesday it would close 33 stores and cut 2,000 jobs as part of its efforts to return to profitability.

Chief Executive Myron Ullman said in a statement the action "addresses a strategic priority to improve the profitability of our stores."

Penney is the second major U.S. retailer in as many weeks to announce layoffs. Last week, Macy's Inc. (NYSE:M) said it was eliminating 2,500 jobs. Those cuts will be offset over time as the retailer plans to add positions to its online business, leaving overall staffing levels unchanged at around 175,000.

Sears Canada Inc. (TO:SCC) said Wednesday it would cut this year more than 1,600 jobs, or more than 7 percent of its workforce, as it reorganizes and outsources some of its business.

Penney, which operates about 1,100 mid-market department stores in the United States, is trying to stanch enormous losses and win back shoppers after a 25 percent drop in sales in fiscal 2012 during a failed attempt to go upmarket.

It has returned to the discounts that were long its hallmark and brought back popular in-house brands.

Sales started ticking up in the autumn after nearly two years of monthly sales drops but remain well below fiscal 2011 levels. A press release last week with scant details on its December sales results raised concerns that the turnaround stalled during the key holiday season.

Analysts expect Penney to report a 70-cent per share loss for the holiday quarter, according to Thomson Reuters I/B/E/S.

A Penney spokeswoman on Wednesday said two of the 33 stores were locations owned by the company, with the remainder being leased stores. Penney leases its stores at over half of its mall locations, according to an analysis last year by Green Street Advisors.

The closings, expected to be completed by May, will generate cost savings of $65 million per year, beginning in 2014. Penney expects estimated pretax charges of about $26 million in the current quarter and another $17 million spread across future periods.

Stores closing include five in Wisconsin,, where archrival Kohl's Corp (NYSE:KSS) is dominant, three in Pennsylvania, and two in Florida. No stores in Penney's home state of Texas are slated to close.

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