On Wednesday, January 15th, J.C. Penney Co. announced the shutdown of 33 stores mainly located in smaller markets that have been experiencing a continual decline in customer visits.
According to Chief Executive Mike Ullman, the clothing company chain has experienced a drastic fall in sales and the closing of selective locations will help to improve the performance of the company’s stores.
This in result will affect present-day workers of Penney, which operates more than 1,000 locations and employees over 100,000 staff members. A staff cut of 2,000 workers is expected to occur within the next few weeks and will be completed by May.
The company, who has endure nine quarters without a successful profit, proposes that this strategy will help revive their loss by saving $65 million annually.
The company has not closed a large portion of its stores since 2001, but unfortunately, the ex-CEO’s prior strategy of replacing sales and discount promotions with low prices caused the company to plummet in revenue.
J.C. Penney to close 33 stores, cut 2,000 positions. http://t.co/6RzqIhrPUq
— Wall Street Journal (@WSJ) January 16, 2014
Ullman, who replaced former CEO Ron Johnson in April, “has restored promotions, brought back popular private-label brands and reinstated commissions for some salesmen while ending his predecessor’s strategy of remodeling the stores into collections of boutiques,” according to Bloomberg.
Kirk Ludtke, an analyst of CRT Capital Group, agrees that Ullman’s new strategy has improved the condition of the store.
“I think he’s done a good job of stabilizing the situation,” Ludtke reported to USA Today.
Ludkte also states that Penney’s closing will assist them in catching up to other national chains in the market.
However, Penney’s is not the only clothing company going through a setback.
Macy’s announced last week that it plans to cut 2,500 staff workers, close down a few stores but open new locations as well.
Analysts have concluded that early discounts during the holiday season were not too kind to retailers across the nation, which ultimately resulted in the reevaluation of store performances and profit.