J C Penney Company Inc (NYSE:JCP) has, like many big retailers, struggled in 2017, announcing 138 store closings and 6,000 layoffs. In addition to the increase of online sales and Amazon.com, Inc‘s (NASDAQ:AMZN) so-called “Amazon Effect,”’ J C Penney’s revenues have been hit by lower apparel spending, the top sales driver for department stores.
The store closings and liquidations took a toll on the department store chain in the second quarter, with the company’s loss widening over that period.
This is just another sign of the struggles brick-and-mortar retailers are facing with the “retail apocalypse” and stores like Amazon claiming more and more retail stores.
J C Penney’s Sales Fall, Part of Brick-and-Mortar Struggle with Online Retailers
J C Penney has been struggling with declining sales and earnings for months and months, despite its announced store closures and layoffs, which were expected to help turn the company’s fortunes around.
The company openly attributed the 138 store closures and 6,000 layoffs to increased competition from online retailers. In a statement, CEO Marvin Ellison said, “We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers.”
The restructuring came as J C Penney announced that comparable-stores sales in the fourth quarter of 2016 fell 0.7% and were flat for the year. In November and December, J C Penney reported a 0.8% decline in same-store sales. During the same period in 2015, the retailer reported a 3.9% increase in same-store holiday sales.
Department store chains like J C Penney continue to struggle with shifting consumer habits and the significant loss of foot traffic at malls all across America. While J C Penney was making progress in 2014 and 2015, sales growth stalled in 2016 and in 2017, the retailer initially expected comparable same store sales to range from a one-percent drop to one-percent increase.
List of J C Penney Store Closings in 2017: Most TX, PA, MN, MI
A month after announcing the planned closure of 138 stores, J.C. Penney finally announced which stores would be closing in 2017. The states hit hardest by the store closings included Texas (9), Minnesota (8), Pennsylvania (7), and Michigan (7).
Alabama: Auburn Mall, Tannehill Promenade, Gadsen Mall, and Jasper Mall
Arkansas: Military Plaza, Chickasaw Plaza
Arizona: Riverview Mall
California: Downtown Bishop, Sunwest Plaza, The Village at Orange, Hilltop Mall
Colorado: Fort Morgan Main St., Glenwood Springs Mall, St. Vrain Centre, Broadway Plaza
Connecticut: Connecticut Post Mall
Florida: Jacksonville Regional Shopping Center, Palatka Mall
Georgia: Dublin Mall, Macon Mall, Milledgeville Mall, Gateway Plaza, Tifton Mall
Iowa: Downtown Decorah, Crossroads Mall, Penn Central Mall, Quincy Place
Idaho: Snake River Plaza
Illinois: Eastland Mall, Fulton Square, Village Square Mall, freestanding store in Macomb, Peru Mall, Northland Mall, Centerpointe of Woodridge
Indiana: FairOaks Mall, Connersville Plaza, Huntington Plaza, Jasper Manor Center, Logansport Mall
Kansas: Chanute Square, downtown Great Bend, Hutchinson Mall, freestanding store in Lawrence, Winfield Plaza
Louisiana: Cortana Mall, Park Terrace, North Shore Square
Massachusetts: Berkshire Mall
Maryland: Easton Marketplace
Maine: Rockland Plaza
Michigan: Lakeview Square Mall, Delta Plaza, Westshore Mall, Copper Country Mall, Birchwood Mall, Midland Mall, Cascade Crossings
Minnesota: Central Lakes Crossing, Five Lakes Centre, Faribo West Mall, Irongate Plaza, Hutchinson Mall, Red Wing Mall, downtown Thief River Falls, freestanding store in Winona
Missouri: Maryville Center
Mississippi: Leigh Mall, Southgate Plaza, Greenville Mall, Bonita Lakes Mall, Oxford Mall
Montana: Capital Hill Mall, Sidney Main Street
North Carolina: Albemarle Crossing, Boone Mall, Eastridge Mall, Blue Ridge Mall, Monroe Crossing, Becker Village Mall
North Dakota: Prairie Hills Mall, Buffalo Mall, downtown Wahpeton
Nebraska: Fremont Mall, downtown McCook, Platte River Mall
New Jersey: Rio Grande Plaza
Nevada: The Boulevard
New York: Dunkirk-Fredonia Plaza, Westfield Sunrise, Palisades Center
Ohio: Findlay Village Mall, New Towne Mall New, Richmond Town Square, St. Mary’s Square
Oklahoma: Altus Plaza, Ne-Mar Shopping Center, Ponca Plaza, Pioneer Square Shopping Center
Oregon: Downtown Astoria, Grants Pass Shopping Center, downtown La Grande, downtown Pendleton, The Dalles Main Street
Pennsylvania: Columbia Mall, Clearfield Mall, King of Prussia Mall, Philadelphia Mills, Bradford Towne Centre, Lycoming Mall, Willow Grove Park
South Carolina: Citadel Mall, Town ‘N Country
South Dakota: Palace Mall, Northridge Plaza, Watertown Mall, Yankton Mall
Tennessee: Greeneville Commons, Knoxville Center, County Market Place
Texas: Athens Village Shopping Center, Borger Shopping Plaza, Heartland Mall, downtown El Paso, Marshall Mall, downtown McAllen, University Mall, King Plaza Shopping Center, Bosque River Center
Virginia: New River Valley Mall, Tanglewood Mall
Washington: Pilchuck Landing
Wisconsin: Pine Tree Mall, Marshfield Mall, Richland Square Shopping Center, Rapids Mall
West Virginia: Foxcroft Towne Center
Wyoming: Downtown Sheridan
J C Penney Store Closings Triggered Sales Decline in Q2
The announced store closures took a toll on J C Penney’s second-quarter results, with earnings and same-store-sales coming in below estimates. The company’s second-quarter loss widened to $62.0 million, or $0.20 per share, from $56.0 million, or $0.18 per share, in the same prior-year period.
Adjusted net loss (excluding one-time items) was $28.0 million, or $0.09 per share, from $16.0 million, or $0.05 per share, in 2016. Analysts expected J C Penney’s adjusted net loss to be $0.05 per share.
The department store retailer blamed liquidating the inventory of 129 stores during the quarter on earnings and gross margins.
The company’s outlook for the remainder of the year got even uglier in October, after it reduced its third-quarter and annual forecasts.
In August, J.C. Penney’s full-year guidance called for comparable store sales to be between down one percent and up one percent and adjusted earnings per share of $0.40 to $0.65.
But in October, it said it expects full-year comparable sales to be flat to down one percent and adjusted earnings per share of $0.02 to $0.08. At the midpoint, that represents an earnings reduction of 90%.
The massive change in full-year guidance creates huge uncertainty for the overall shape of the retail industry. It also creates chaos in the markets. Since the start of 2017, J.C. Penney’s share price has fallen more than 60%.
How close management will be to its targets will have to wait until early 2018.
“JCPenney Announces Plan To Optimize Retail Operations, Advance Growth And Drive Profitability,” J C Penney Company, Inc., February 24, 2017.
“JCPenney Reports Positive Net Income For Fiscal 2016; A $514 Million Increase Compared To The Prior Year,” J C Penney Company, Inc., February 24, 2017.
“JCPenney Reports A 1.5 Percent Increase In Total Net Sales For The Second Quarter 2017,” J C Penney Company, Inc., August 11, 2017.
“JCPenney Provides Update On Third Quarter 2017 Performance,” J C Penney Company, Inc., October 27, 2017.