J.C. Penney is closing up to 140 stores to 'effectively compete against the growing threat of online retailers'
(Spencer Platt/Getty Images)
J.C. Penney reported stronger-than-expected results for the fourth quarter on Friday and announced plans to shut down a large number of stores in 2017.
The retailer reported adjusted earnings for the quarter of $0.64 a share, higher than analysts' expectations of $0.60 a share. Revenue came just barely below expectations at $3.96 billion against analysts' projections of $3.98 billion.
Comparable-store sales also missed slightly for the quarter, falling 0.7% from the same quarter last year. Analysts expected a drop of just 0.5%.
In addition to reporting earnings, J.C. Penney announced plans to "optimize retail operations" in 2017, which will include shuttering 130 to 140 store locations and closing two distribution centers.
"During the year, it became evident the stores that could fully execute the company's growth initiatives of beauty, home refresh, and special sizes generated significantly higher sales and a more vibrant in-store shopping environment," CEO Marvin Ellison said in a press release.
"We believe the relevance of our brick-and-mortar portfolio will be driven by the implementation of these initiatives consistently to a larger percent of our stores. Therefore, our decision to close stores will allow us to raise the overall brand standard of the company and allocate capital more efficiently."
The reason for the shift, according to the release, is the tough 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," Ellison said in the release.
Ellison also announced that to reduce the impact on workers the company was instituting an early-retirement program for roughly 6,000 employees.
Following the news, J.C. Penney's stock popped in premarket trading before falling into the red. As of 7:50 a.m. ET, the stock price was lower by $0.07, or 1.02%, at $6.79.
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