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JC Penney to tighten adult to 140 stores, offer buyouts

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Different selling habits of immature people are causing vital dialect stores to onslaught and rethink their sell strategies.
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J.C. Penney (JCP) skeleton to tighten 130 to 140 stores and offer buyouts to 6,000 workers as a department-store attention sags in foe with online sellers and nimble niche retailers.

The association pronounced Friday that it would shiver 13% to 14% of a locations and deliver new products and services directed during a changeable preferences of a patron base.

The cuts come amid ascent hurdles for once-stalwart department-store bondage such as Macy’s and Sears, that are also aggressively shutting stores to shed costs as shoppers group to alternatives.

Macy’s recently announced skeleton to cut 100 of a 675 full-line stores. Sears pronounced it skeleton to tighten 150 stores, including 108 Kmart locations, withdrawal it with some-more than 1,300.

“It became apparent to us that a footprint was too large,” Penney CEO Marvin Ellison told investors Friday, and a closures will “allow us to lift a altogether code customary of J.C. Penney” and deposit in remaining stores.

A list of Penney stores to tighten will be expelled in mid-March. Liquidation sales are approaching to take place by a second quarter.

The closures symbol a depart from Penney’s comparatively solid store count over a final 15 years. The association had 1,021 stores as of Jan. 30, 2016, according to corporate documents, down from a high of 1,108 in 2009.

“This is only a marketplace correction,’’ Farla Efros, boss of HRC Retail Advisory, pronounced in an interview. “There were too many stores, and too many retailers and too most sound in a market.’’

Online competition, fast-fashion retailers such as HM and Forever 21 and discounters such as T.J. Maxx have undermined Penney’s business. Ellison pronounced a association is responding by overhauling a products.

Penney is adding toys, beauty products, appliances and home products as it tries to interest to a patron base. Some 70% of a bottom is stoical of women. And 70% of all business possess their home.

The appliances push, interconnected with a introduction of new home designation services, is targeted during swiping business from bum aspirant Sears.

The tradesman is also shortening its emphasis on women’s attire formerly geared toward business outfits and grave wear. Instead, a association is adding jaunty and convenience wear, widening a accessibility of Nike and Adidas equipment and introducing some-more plus-size clothes. And a association will change all of a women’s shoe departments toward “open-sell” environments, shortening a need for sales workers to have to hunt by behind bedrooms to find them a right pair.

Ellison told investors that a association would “pivot a sell devise toward non-apparel.”

That includes a devise to “significantly expand” fondle sales after enlivening formula from fondle sales in a singular series of stores during a holiday season, Ellison said.

Despite a moves, Penney’s projected that sales during stores open during slightest a year would to comparatively low altogether — from a 1% decrease to a 1% increase.

That projection “reduces conviction” in a company’s long-term devise after a prior projection of 3% annual expansion by 2019, UBS researcher Michael Binetti pronounced in a note to investors.

“They are relocating to compare consumer selling preferences, that should hint opportunity,” Greg Portell, lead partner in a sell use of consultancy A.T. Kearney, pronounced in an email. “But a plea will be to govern new merchandising and selling strategies.”

Penney expects to save $200 million in annual costs in tie with a store-closure plan, including a shuttering of dual placement centers. It will record an initial pre-tax assign of $225 million to cover a initial closure costs.

In a associated move, a tradesman pronounced it would offer a “voluntary early retirement program” to about 6,000 workers, including corporate, store and supply sequence workers.

Ellison said many workers influenced by store closures would be hired to fill jobs vacated by employees who accept buyouts.

More on store closings:

Penney pronounced Friday that sales during stores open during slightest a year fell 0.7% in a mercantile fourth quarter, that included the essential holiday selling season. Overall, net sales were down 0.9% to $3.96 billion, while a association swung from a detriment of $131 million to net income of $192 million.

But a association pronounced that discounts dragged down profitability and warned that a women’s wardrobe business struggled.

The company’s batch fell 4.8% to $6.53 during 1:44 p.m.

“The dialect store judgment is being put underneath serious vigour by mixed prevalent trends,” Portell said. “Other channels are simply softened matched to expostulate those consumer promises.”

One probable track to softened profitability is charging some-more during some stores than others, called “regional pricing,” Chief Financial Officer Ed Record said. The association is contrast non-static pricing during about 60 locations.

“We know we have large opportunities around that,” Record said.

Despite a difficulties, Penney incited a full-year net distinction for a initial time given 2010, reflecting substantial swell after a brief duration in that a association experimented with tying discounts.

Encouraging signs enclosed sales of home goods, Sephora beauty products, a salon multiplication and excellent jewelry. Penney also pronounced it had “record” online sales during a holiday selling season, but providing figures.

Contributing: Charisse Jones, Mina Haq

Follow USA TODAY contributor Nathan Bomey on Twitter @NathanBomey.

Article source: http://www.usatoday.com/story/money/2017/02/24/jc-penney-store-closures/98344540/

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