JCPenney just announced their plans to close approximately 130-140 stores including 2 distribution facilities today. The closures come as a part of the department retailer’s plan to better align their brick-and-mortar location with its digital efforts which will encourage sustainable growth in the coming years. The capital obtained from these store closures will be redirected to enhancing and carrying out initiatives to existing stores that are slated to perform well for the company. These initiatives include improvements of select departments and expanding their range of special sizing as Marvin R Ellison, chairman and chief executive officer of JCPenney noted.
“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… We believe the relevance of our brick and mortar portfolio will be driven by the implementation of these initiatives consistently to a larger percent 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 result of closing so many locations will affect thousands of workers and to accommodate those affected, JCPenney established a voluntary early retirement (VERP) program. Approximately 6,000 team members will be available for this program. The company will see a rise in openings for full-time positions as they suspect a large number of current associates will take advantage of the early retirement program.
Eligibility for the VERP program includes the home office, stores, and supply chain personnel with a set criteria related to age and years of service as of January 31, 2017. All those who qualify for the program have from now through March 17, 2017, to apply to the program before the consideration period expires.
JCPenney has yet to announce the official list of store closures, however, they have revealed that the distribution center located in Lakeland, Florida is slated to close early June. Furthermore, they are also in the process of selling a supply chain facility located in Buena Park, California.
Workers who are affected by these closures will receive separation benefits which also includes employment assistance and outplacement services (resume writing and interview preparations).
JCPenney will announce the full list of planned closures mid-March and majority of impacted stores are expected to close the second quarter of 2017.