US retail giant JC Penney is to shutter 18 full-line stores this summer as part of its bid to return to profitable growth.
The new locations include the three closures announced in January and either require “significant” capital, are minimally cash flow positive today relative to the company’s overall consolidated average, or represent a real estate monetisation opportunity, JC Penney said.
“Comparable sales performance for the closing stores was significantly below the remaining store base and these stores operate at a much higher expense rate given the lack of productivity,” the retailer added.
In addition, the company will also close nine ancillary home and furniture stores in a move designed to further align the company’s brick-and-mortar presence with its omnichannel network, and enabling capital resources to be reallocated to locations and initiatives that offer the greatest long-term value potential.
JC Penney said associates who will be impacted by the store closures will receive separation benefits, which includes assistance identifying other employment opportunities and outplacement services, such as resume writing and interview preparation.
During the first half of 2019, the company expects to record an estimated pre-tax charge of about US$15m, primarily relating to non-cash asset impairments and transition costs, in connection with the closures.
Nearly all impacted stores are expected to close in the second quarter of 2019.
The news comes on the back of a drop in both earnings and revenue in the fourth quarter. For the 13 weeks to 2 February, net income totalled US$75m, compared to $242m in the same period last year, while total net sales, meanwhile, decreased 9.5% to $3.67bn from $4.05bn last year.
