J.C. Penney Co. said Thursday it will close 44 stores and take a $275 million pre-tax charge in the fourth quarter for restructuring, Reuters reports. The mostly non-cash charge consists of $185 million for J.C. Penney department stores and catalog and $90 million for Eckerd drugstores. The charge will cause the company to post a loss for the quarter.
The charges reflect the estimated cost of closing 44 underperforming J.C. Penney stores and three catalog outlet stores. Most of the stores will close in the first half of 2001. Approximately 5,000 store employees will be affected by the closings, but many will be offered positions in other stores, Reuters reports. Three hundred jobs in the home office and field organization will also be cut along with 265 jobs in Eckerd's headquarters and field organization.
J.C. Penney has seen its market share slip for several years as it was outflanked by discounters and trendier retailers, the Associated Press reports. Analysts say the company was slow to update its stores and suffered from poor marketing and stale merchandise. According to AP, J.C. Penney Spokesman Tim Lyons says the stores targeted for closing were identified during an ongoing review of sales performance. "These were underperforming stores," Lyons says. "It's tough for the stores that are being closed, but it was something we felt we had to do to begin to turn the business around."
This isn't the first time in recent years J.C. Penney has had to close stores. Last year, the company announced it would close 45 department stores and 279 Eckerds, which resulted in about 1,875 layoffs, AP reports.
- by Julia M. Duncan