In its ongoing bid to get back on its feet, embattled retailer JC Penney Company, Inc. (JCP) announced after Wednesday’s closing bell that it is shuttering 33 underperforming stores across the U.S., including five stores in Wisconsin, a state where rival Kohl’s (KSS) has a strong presence. With that comes the dismissal of approximately 2,000 employees.
Penney’s has shed more than 40,000 positions in the last couple years, against a backdrop of diving sales.
Penney’s thinks that the move will save the company about $65 million annually, starting this year. Inventory at the stores will be sold with the store closings expected to be completed by early May.
The company added that it expects a pretax charge of about $26 million in Q4 2013 and about $17 million in future quarters related to the store closings.
On the optimistic side of the tracks, Penney’s is proceeding with opening a new store in Brooklyn, New York. JCP still has more approximately 1,100 stores nationwide.
"As we continue to progress toward long-term profitable growth, it is necessary to reexamine the financial performance of our store portfolio and adjust our national footprint accordingly," said Myron E. Ullman, III, chief executive officer of JCPenney. "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 JCPenney for future success."
In April last year, Ullman returned to the helm of Penneys, replacing Ron Johnson (whom had replaced Ullman) after 16 months as CEO. Ron Johnson poor showing to try and turn the company around earned him the dubious distinction as numero uno on Fox Business’ list of the worst CEO’s of 2013.
For Johnson’s part, he tore the company apart from top to bottom and tried to put it back together with new management and promotional philosophy. Needless to say…he failed miserably and was given the boot. Investors who lived through the turmoil like to point a finger (I won’t say which finger) at hedge fund billionaire Bill Ackman, whose Pershing Square Capital Management had an 18-percent stake in the company and fought ferociously to put former Apple (AAPL) retail head Johnson into the big office at JCP.
When Ackman dumped his shares of JCP in August, it was reported that he lost more than $500 million on the investment. A look at Ackman’s history with retailers – he also lost big on Target (TGT) – should have any retailer shaking when the activist investor comes calling.
With all that water under the bridge, Ullman still faces a tall task to save the 111-year old iconic retailer. Analysts are expecting the company to have a net loss of about 70 cents in the latest quarter, which included the important holiday season.
Shares of JCP are still sitting near 25-year lows, closing Wednesday at $7.01 for a gain of 1.2 percent on the day. Shares moved modest lower to $6.95 in extended trading following the restructuring news.
The list of the stores that will be closed (and the shopping center if applicable)
Selma, AL - Selma Mall
Rancho Cucamonga, CA - Arrow Plaza
Colorado Springs, CO - Chapel Hills Mall
Meriden, CT - Meriden Square
Leesburg, FL - Lake Square Mall
Port Richey, FL - Gulf View Square
Muscatine, IA - Muscatine Mall
Bloomingdale, IL - Stratford Square Mall
Forsyth, IL - Hickory Point Mall
Marion, IN - Five Points Mall
Warsaw, IN - Marketplace Shopping Center
Salisbury, MD - The Centre at Salisbury
Marquette, MI - Westwood Plaza
Worthington, MN - Northland Mall
Gautier, MS - Singing River Mall
Natchez, MS - Natchez Mall
Butte, MT - Butte Plaza Shopping Center
Cut Bank, MT
Kinston, NC - Vernon Park Mall
Burlington, NJ - Burlington Center
Phillipsburg, NJ - Phillipsburg Mall
Wooster, OH - Wayne Towne Plaza
Exton, PA - Exton Square Mall
Hazleton, PA – Laurel Mall
Washington, PA - Washington Mall
Chattanooga, TN - Northgate Mall
Bristol, VA - Bristol Mall
Norfolk, VA - Military Circle Mall
Fond Du Lac, WI - Forest Mall
Janesville, WI - Janesville Mall
Rhinelander, WI - Lincoln Plaza Center
Rice Lake, WI - Cedar Mall
Wausau, WI - Wausau Mall