J.C. Penney Co. (JCP) Chief Executive Officer Mike Ullman, intensifying efforts to revive the money-losing department-store chain, plans to close 33 stores and eliminate about 2,000 jobs to help save $65 million a year.
The closings and cuts will result in pretax charges of $26 million in the fourth quarter and $17 million in future periods, the Plano, Texas-based company said in a statement yesterday.
Ullman, who returned in April to replace Ron Johnson, 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. The chain has gone nine straight quarters without a profit, and analysts surveyed by Bloomberg are estimating it will post a $207 million loss for the current quarter.
“The closing of 33 stores sounds like not all is well,” Paul Swinand, an analyst for Morningstar Inc. in Chicago, said in a telephone interview. “It’s also not a massive restructuring.”
Many of the stores on the list are in small markets at regional malls that most likely have declining visitors, so their shuttering may boost results, he said. The closings, which will be completed by early May, represent about 3 percent of J.C. Penney’s stores, and the job cuts would be about 2 percent of its workforce.
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