One of the original retail kings in the United States has been experiencing difficulties recently, and things got worse on Jan. 15, when it announced it would close 33 stores and cut about 2,000 jobs. J.C. Penney Co. is one of the oldest retailers in the country, and while it was once a formidable competitor in the industry, its stock has plunged nearly 80 percent in the past two years.
The cuts are expected to save about $65 million a year. J.C. Penney's third-quarter earnings showed an adjusted net loss of $457 million in the three months that ended Nov. 2, The New York Times reported. However, its online sales rose 24.5 percent in that time.
"As we continue to progress toward long-term profitable growth, it is necessary to re-examine the financial performance of our store portfolio and adjust our national footprint accordingly," executive Myron E. Ullman III said in a statement. "While it's always difficult to make a business decision that impacts our valued customers and associates, this important step addresses a strategic priority to improve the profitability of our stores and position J.C. Penney for future success."
Property problems
As locations close, commercial property management companies around the country will have the chance to market large department stores. Bloomberg reported that just two of the stores set to close are owned by J.C. Penney, with the rest being leased from commercial real estate companies.
Most of the locations that will close are of the chain's smaller format, which weren't remodeled under the reign of former head Ron Johnson. The stores that were remodeled got new designated sections for brands like Joe Fresh and Izod, according to Bloomberg.
Some retail analysts have said that closing just 33 of 1,100 stores around the country won't be enough. Commercial landlords should take note to accommodate tenants, lest they experience too many difficulties and have to close as well.
"The hole is too deep," Burt P. Flickinger III, managing director at the Strategic Resource Group, a consumer industry consulting company, said in an interview with The New York Times. "This is a warning shot across the bow to landlords to try to provide accommodations or concessions, like on common area maintenance charges or lease reductions."
