The news of more jobs and a better economy in the United States has now been overrun by JC Penny’s announcement to close 138 locations.
The already struggling department store had previously announced that they wanted to close stores to encourage corporate growth, and they also wanted to put more emphasis on their e-commerce platforms versus physical stores.
Now more than 41 states will lose JC Penny stores, with Texas and Minnesota hit the hardest.
Following Trends for Other Major Department Store Chains
JC Penny is not the first, and probably not the last, to report store closures in the country. Macy’s and Sears have already made decisions to close out their retail locations, including the Kmart brand that shut down more than 300 stores in 2017.
The closures show that traditional department stores seem to be a thing of the past, especially with more consumers preferring the advantages of online shopping. Also, lower-quality shopping centers are affecting department stores, especially when they lack foot traffic and consumer appeal to keep up their revenue.
JC Penny stated that closing their stores allows them to “adjust our business to effectively compete” against the growing threat of online retailers. The company reported that the store closures would not occur until the second quarter of 2017, and liquidations on those locations will begin April 17th, 2017.
How Much Will JC Penny Really Save?
JC Penny estimates that they will save $200 million per year by closing these locations, but they are not focusing on the effect it will have on the consumer and job markets in those areas. The company wants to invest their funds into their best performing locations, which will help them overcome an astounding $4.3 billion in debt.
Already they estimate that more than 5,000 jobs will be affected by these closures, and the company said that they would offer a voluntary early retirement program for an estimated 6,000 employees. However, this retirement is based on age and tenure with the enterprise. Therefore, employees must decide if they will accept their offered package no later than March 31, 2017.
Individual leaders will not be out of a job because JC Penny announced that they would relocate them or provide support services for workers who are eligible. However, they were not clear as to what “eligible” meant.
What States Will Experience Closures
Jobs will be lost throughout the United States, and just some locations JC Penny expects to close include stores in Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Florida, Georgia, Iowa, Idaho, Illinois, Indiana, Kansas, Louisiana, Massachusetts, Maine, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, North Dakota, Nebraska, New Jersey, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, West Virginia, and Wyoming.
The cuts will take 14% of their portfolio, which will also affect 5% of their annual sales. JC Penny has already been struggling, however. While they had a $192 million profit for the fourth-quarter of 2016, the same period in 2015 saw a $131 million loss.