J.C. Penney Reports Sales Drop
To Close 130-140 Stores
Customers ride the escalator at a J.C. Penney store in New York August 14, 2013.
Fri Feb 24, 2017 | 7:42am EST
REUTERS/Brendan McDermid/File Photo
Department store operator J.C. Penney Co Inc (JCP.N) said on Friday it would close about 130-140 stores over the next few months, and reported a bigger-than-expected drop in same-store sales for the holiday quarter.
The company said it would also initiate a voluntary early retirement program for about 6,000 eligible employees and close two distribution facilities.
Shares of the company, which reported its first annual adjusted profit in five years, rose 3 percent in premarket trading.
J.C. Penney's store closures come after larger rival Macy's Inc (M.N) said in November it would shut 100 stores, as department stores struggle with weak demand for apparel and growing competition from online retailers.
"We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers," Chief Executive Officer Marvin Ellison said in a statement.
The stores being closed represent about 13-14 percent of J.C. Penney's store base and account for less than 5 percent of annual sales, the company said.
J.C. Penney said it expected annual savings of about $200 million from the cost-cutting measures, and would take a related pre-tax charge of about $225 million in the first half of the current year.
Sales at stores open more than a year fell 0.7 percent in the fourth quarter ended Jan. 28, bigger than the 0.5 percent drop estimated by analysts polled by research firm Consensus Metrix.
J.C. Penney reported an adjusted profit of 64 cents per share, beating the average analysts' estimate of 61 cents, according to Thomson Reuters I/B/E/S.
(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Sriraj Kalluvila)