Avoiding for years, despite of loss, the J.C. Penney Co. has planned to shut down about 140 of its stores from the net count of 1000 or so. The company said it was also offering a voluntary buyout program to 6000 of its employees. J.C. Penny Co. was one of the growing American retailer however is now shrinking to survive a shift away from the traditional stores. Presenting their first ever annual profit reports on 25th of February 2017, the executives said that they would identify and announce the locations to set close in the month of March this year. The company has joined the traditional chain of sales and has planned to closed the locations as more shopping have moved online.
According to the statements made by the analysts, there are hundreds of stores are likely to be closed especially the one located in the older malls or areas with weaker customer response. The reason of having an impact on the sales and performance of these locations is more likely because of the online business rivals including Amazon.com, offer price retailers and others. The chief executive of Penney said that the closing will allow the company to modify its business in order to compete effectively with the growing threats on online retailers. The unclosed physical stores will serve as the warehouse for Penny and will help to reduce the delivery costs.
Ellison, in an interview has acknowledged that the technology especially smartphones have changed the way of living and the attitudes of customers in terms of shopping. It has provided them with better transparency on pricing as well as lesser reason to roam around. “But the department store model is not broken- we just need to adjust” he further added.
As according to the given figures of commerce department, in the last year the spending of Penney rose by 11% in online stores and fell for about 6% at the physical stores. Keeping in mind the statistics, the analyst said that closing was necessary, despite of the fact that it will be a tough job to generate more business in the presence of such appreciated competitors.
Statistics for the year 2017 shows a decline of shares of the company to about 9% at the rate of 6.25 US dollars. The stocks have also dropped for about 25%, leaving the market cap of less than 2billion USD. During the quarter ended January 31, 2017, the company’s same-store sales fell 0.7 %, compared with 4.1 % growth in the previous year’s period. Penney expects the metric to be down 1 % to up 1 % for the year.
