JC Penney reported stronger than expected results for the fourth quarter on Friday and announced plans to shut down a large number of stores in 2017.
The retailer reported adjusted earnings per share for the quarter of $US0.64, higher than analysts’ expectations of $US0.60 per share. Revenue came just barely below expectations at $US3.96 billion against analysts’ projections of $US3.98 billion.
Comparable-store sales also missed slightly for the quarter, falling 0.7% from the same quarter last year. Analysts expected a drop of just 0.5%.
In addition to reporting earnings, JC Penney announced plans to “optimise retail operations” in 2017 which include shuttering between 130 and 140 store locations and closing two distribution centres.
“During the year, it became evident the stores that could fully execute the company’s growth initiatives of beauty, home refresh and special sizes generated significantly higher sales, and a more vibrant in-store shopping environment,” said CEO Marvin Ellison in a press release.
“We believe the relevance of our brick and mortar portfolio will be driven by the implementation of these initiatives consistently to a larger per cent of our stores. Therefore, our decision to close stores will allow us to raise the overall brand standard of the company and allocate capital more efficiently.”
The reason for the shift, according to the release, is the tough competition from online retailers.
“We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers,” said Ellison in the release.
Ellison also announced that in order to reduce the impact on workers, the company was instituting an early retirement program for roughly 6,000 employees.
Following the news, JC Penney’s stock popped in pre-market trading before falling into the red. As of 7:50 a.m. ET, thr stock was lower by $US0.07, or 1.02%, at $US6.79 per share.