J.C. Penney (JCP) announced that it planned to close 130 to 140 stores as well as two distribution centers in the coming months.
The struggling retailer follows in the footsteps of Sears (SHLD) and Macy's (M) , both of which have plans to shut stores to cut costs as shoppers move away from mall-based retailers. Traditional brick-and-mortar networks are scaling back their networks in an effort to save costs and take on e-commerce competitors.
The company also said it would be launching new products and services in order to cater to the changing preferences of its customer base. It is planning to add toys, home goods, beauty products and appliances.
Announcing the outlet closures, CEO Marvin Ellison maintained that the move will "allow us to raise the overall brand standard of J.C. Penney."
"We believe closing stores will allow us to adjust our business to effectively compete against the growing threat of online retailers," he added.
It is not known which of the company's stores will be closed. However, the closures are expected to affect 6,000 employees who will be offered voluntary retirement.
The stores shutting down represent about 5% of annual revenue, and have performed at levels significantly below that of other locations that are remaining open. It was expensive to run these stores given their lower productivity. Annual savings from the move to shut outlets and reduce headcount are estimated at about $200 million.
