JC Penney to close 18 stores, shares pop on news
J.C. Penney had both good and bad news on Thursday as it reported earnings and sales for the holiday quarter.
The good news is that the struggling retailer topped analysts' expectations and was successful in reducing a glut of unsold inventory in 2018. Shares popped on the news.
However, in that same breath, it also said it plans to shutter 18 department stores this year, including three it already announced last month.
Additionally, it plans to close nine of its home and furnitiure stores to coincide with its previous announcement from earlier this month to discontinue selling major applicances and furniture at all of its stores by the end of the month.
Also, while the retailer beat expectations, same-store sales during the critical holiday quarter still declined by 4 percent.
"The stores identified for closure either require significant capital, are minimally cash flow positive today relative to the company's overall consolidated average or represent a real estate monetization opportunity," the company said.
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It also added that employees impacted by the closures will receive "separation benefits."
Like Sears, J.C. Penney has continued to battle declining sales and executive vacancies over the last couple of months. It added that its decision to stop selling applicances was made to "better meet customer expectations" and improve its financial performance and drive profitable growth.
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For the fourth quarter, Penney's reported a net income of $75 million, or 24 cents per share, compared with $242 million, or 77 cents a share from a year ago. Additionally, revenue fell 8.4 percent to $3.79 billion from $4.14 billion a year ago.
However, that number was slightly ahead of analysts' expectations of $3.78 billion.