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J.C. Penney Scales Back Physical Stores

Feb 27, 2017 3:41 AM   By Rapaport News
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 J.C. Penney plans to close 130 to 140 stores this year, joining the list of major U.S. retailers downsizing their brick-and-mortar networks in the face of growing competition from ecommerce.

The department-store chain will shut 13 to 14 percent of its outlets and two distribution facilities, the company said in a statement last week. It will unveil the locations of the closures in mid-March and expects the stores to shut in the second quarter.

“We believe the future winners in retail will be the companies that can create a frictionless interaction between stores and ecommerce, while leveraging physical locations to minimize the growing operational costs of delivery,” said Marvin Ellison, J.C. Penney’s chairman and chief executive officer.

The move came as the retailer reported revenue had declined 0.6 percent to $12.55 billion in the fiscal year that ended January 28. Sales dropped 0.9 percent to $3.96 during the fourth quarter, which included the crucial holiday season.

The outlets shutting down represent less than 5 percent of annual revenue and have recorded comparable sales performance significantly below that of the stores that will remain open, the company pointed out. The affected stores are also much more expensive to run given their lower productivity, it explained. Annual savings from the downsizing are estimated at $200 million.

The announcement follows a decision by department-store chain Macy’s to close about 14 percent of its physical outlets over the coming years and intensify its focus on digital and mobile retail.

Image courtesy of J.C. Penney
Tags: department-store, ecommerce, J.C. Penney, JC Penney, Macy’s, online retail, Rapaport News, retail, store closures
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