J.C. Penney to close 33 stores, cut 2,000 jobs

J.C. Penney, which operates about 1,100 midmarket department J.C. Penney, which operates about 1,100 midmarket department stores in the United States, suffered a 25 percent drop in sales in fiscal 2012 after a failed attempt to go upmarket and will cut 2,000 jobs and close 33 stores. (April 9, 2013) Photo Credit: AP

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J.C. Penney Co. said Wednesday it will close 33 underperforming stores and cut 2,000 jobs as part of the struggling department store chain's efforts to return to profitability.

The company didn't plan to close any New York locations, according to a list it published of affected stores.

Penney, which operates about 1,100 midmarket department stores in the United States, suffered a 25 percent drop in sales in fiscal 2012 after a failed attempt to go upmarket.

It has been trying to win back customers with deep discounts and the return of popular in-house brands. Sales started ticking up in the autumn after nearly two years of monthly sales drops.

But a news release with scant details on its December sales raised concerns that the turnaround stalled during the key holiday season. It is still clearing out unsold merchandise from last year's failed reinvention at large discounts, pressuring its gross margin.

Analysts expect Penney to report a 70-cent-per-share loss for the holiday quarter, according to Thomson Reuters I/B/E/S.

Chief executive Myron Ullman called the closures and layoffs an "important step" that "addresses a strategic priority to improve the profitability of our stores."

The closings will generate cost savings of $65 million per year, beginning in 2014. Penney expects estimated pretax charges of about $26 million in the current quarter.

The stores closing include five in Wisconsin, where archrival Kohl's Corp. is dominant, three in Pennsylvania, and two in Florida.

The struggling department store chain had 116,000 employees as of Feb. 2, 2013. That was about 40,000 fewer than a year earlier.

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