JCPenney to Close 130-140 Stores, Offers Early Retirement to 6000

JCPenney announced plans Friday morning to close about 130-140 stores nationwide in the next few months, in addition to two distribution centers. The company also is of selling a supply chain facility in Buena Park, Calif.

CEO Marvin R. Ellison said the decision was made, in part, to “adjust our business to effectively compete against the growing threat of online retailers.”

“Maintaining a large store base gives us a competitive advantage in the evolving retail landscape since our physical stores are a destination for personalized beauty offerings, a broad array of special sizes, affordable private brands and quality home goods and services,” Ellison said in the statement. “It is essential to retain those locations that present the best expression of the JCPenney brand and function as a seamless extension of the omnichannel experience through online order fulfillment, same-day pick up, exchanges and returns.”

The company reported net sales of $12.5 billion compared to $12.6 billion in 2015.

The stores being closed, the list of which will be released next month, make up about less than 5% of total annual sales, Penney said. The retailer has about 600 mall-based stores and another 400 smaller standalone stores in smaller markets.

It is initiating a voluntary early retirement program for about 6,000 eligible associates. J.C. Penney expects an annual cost savings of about $200 million. The full list of store closures will be available mid-March with the closures taking place in the second quarter of 2017. J.C. Penney shares are down 11% for the past year while the S&P 500 index SPX, -0.27% is up 22.5% for the same period.