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JC Penney to close up to 140 stores in face of online retail’s “growing threat”

JCPenney is to close up to 140 stores and two distribution centres nationwide over the next few months, axing about 6,000 staff.

Penney said the units, which make up 13-14% of its 1,000-plus store portfolio, underperformed compared to its other locations and their operational expenses were too much “given the lack of productivity.” It will announce which stores will close in coming weeks.

Although the cuts are part of the retail giant’s wider plan to return to profitability, the announcement comes as the US department store sector continues its contraction in the face of the rising online influence. Rivals Macy’s is also closing 100 stores, and Sears is to axe about 150 locations.

Penney chief executive Marvin Ellison said the retailer is slashing stores because “we believe we must take aggressive action to better align our retail operations for sustainable growth.

“Our decision to close stores will allow us to raise the overall brand standard of the company and allocate capital more efficiently.”

He added: “We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers.

Ellison said the company is “pleased with the double digit growth of jcpenney.com and how leveraging our brick & mortar locations is enabling us to offset the last-mile delivery cost.

“We believe the future winners in retail will be the companies that can create a frictionless interaction between stores and e-commerce. … In fact, in 2016 approximately 75% of all online orders touched a physical store.”

JC Penney will close a distribution centre in Lakeland, Florida, in early June, transferring operations to the company’s logistics facility in Atlanta. It is also is selling its supply chain facility in Buena Park, California.

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