J.C. Penney (JCP) plans to close 130 to 140 stores and offer buyouts to 6,000 workers as the department-store industry sags in competition with online sellers and nimble niche retailers.
The company said Friday that it would shutter 13% to 14% of its locations and introduce new goods and services aimed at the shifting preferences of its customer base.
The cuts come amid mounting challenges for once-stalwart department-store chains such as Macy’s and Sears, which are also aggressively closing stores to shed costs as shoppers flock to alternatives.
Macy’s recently announced plans to cut 100 of its 675 full-line stores. Sears said it plans to close 150 stores, including 108 Kmart locations, leaving it with more than 1,300.
“It became apparent to us that our footprint was too large,” Penney CEO Marvin Ellison told investors Friday, and the closures will “allow us to raise the overall brand standard of J.C. Penney” and invest in remaining stores.
A list of Penney stores to close will be released in mid-March. Liquidation sales are expected to take place by the second quarter.
The closures mark a departure from Penney’s relatively steady store count over the last 15 years. The company had 1,021 stores as of Jan. 30, 2016, according to corporate documents, down from a high of 1,108 in 2009.
“This is just a market correction,’’ Farla Efros, president of HRC Retail Advisory, said in an interview. “There were too many stores, and too many retailers and too much noise in the market.’’
Online competition, fast-fashion retailers such as H&M and Forever 21 and discounters such as T.J. Maxx have undermined Penney’s business. Ellison said the company is responding by overhauling its products.