January 24, 2011, 11:33 AM

J.C. Penney closes stores to grow online

Penney will take a $30 million charge to close some stores and consolidate two call centers.

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J.C. Penney Co. Inc. aims to cut costs by closing down some stores and easing out of the large catalog business over the next two years.

In turn, J.C. Penney, No. 16 in the Internet Retailer Top 500 Guide, will plow the estimated first-year savings of $25 million to $30 million back into long-range growth initiatives, including online. As part of the push, the retailer will expand its online apparel offerings for men and women and market to shoppers via social media.

Specific cost-savings moves by J.C. Penney include:

 

 

 

•  Closing five J.C. Penney stores in Morrow, GA; West Dundee, IL; Des Moines, IA; High Point, NC; and Culpepper VA, plus a J.C. Penney Home Store in Duluth, GA.

•  Winding down its “Big Book” catalog operation, which includes 19 outlet stores that carry significant quantities of catalog merchandise.

• Consolidating its furniture outlet business from three stores to two.

• Closing call centers in Grand Rapids, MI, and Albuquerque, NM, and consolidating the activity, including e-commerce-based customer service, with other centers in Columbus, OH, Pittsburgh and Milwaukee.

• Closing a custom decoration fabrication facility in Sacramento, CA, but increasing staffing at another facility in Statesville, NC.

“We see significant opportunities ahead in our core department store and online businesses as part of our long-range plan and we are well prepared to capitalize on them in 2011 and the years to come,” says CEO Myron Ullman. “To achieve this, we undertook a thorough evaluation of our operations to ensure we are managing costs and allocating our resources to the strategies that will best drive both our top and bottom line.”

J.C. Penney, which will report its full-year earnings Feb. 25, will take a one-time charge of $30 million for the fourth quarter to implement its cost-savings plan, the company says.

J.C. Penney didn’t break out online sales in its December sales report, but “Internet sales through JCP.com posted strong growth,” the company says.

For the five-week period ended Jan. 1, J.C. Penney reported:

• Total sales increased year over year 2.4% to $2.95 billion from $2.88 billion.

•Comparable-store sales increased 3.7%.

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