The tough times continue for JCPenney. The department store chain announced plans Thursday to close six additional stores as sales and profit continue to decline.
The company did not share specifics about its store closings, saying it would give more detailed outlook of its real estate plans when it meets with analysts on April 7. The company has about 850 stores currently, down about 200 stores over the last five years.
Sales at stores open at least a year fell 5.6% in JCPenney’s fiscal year, which ended February 1. Sales declined even when excluding the impact of JCPenney’s exit from the appliance and in-store furniture categories.
JCPenney said it expects sales at stores open at least a year to fall another 3.5% to 4.5% in the current fiscal year, although the company said its operating profit should improve. But it said that outlook does not include any possible impact from the spread of the coronavirus or the disruption of its supply chains.
Net income in the fourth quarter, which includes the holiday shopping period, plunged 64% from a year earlier. That resulted in a 5% drop in income for the full year.
“There’s no nice way of saying it: JCPenney was one of the losers over the holidays,” said Neil Saunders, managing director of GlobalData Retail in a note Thursday. “The reality on the ground is that most stores deliver an experience that is well below par. They are messy, crowded with bland merchandise, and lack any energy or inspiration. It is, therefore, hardly surprising that many shoppers are abandoning them.”
Saunders praised the work of JCPenney CEO Jill Soltau, who started at the company in 2018. But he said she’ll need to make more significant changes to turn the company around.
“We welcome the decision to close at least six more shops across this year, although we question whether this goes far enough,” he wrote.
Still, JCPenney (JCP) said it met or exceeded its own financial targets for the year and grew its margin. Shares of JCPenney (JCP) stock were little changed in early trading. Shares of the stock are still well below $1 and the stock is in danger of being delisted by the New York Stock Exchange.
A record number of stores closed last year. And the department store segment has been hit particularly hard, with competition not only from online merchants like Amazon (AMZN), but also from lower-cost big-box retailers such as Walmar (WMT)t, Target (TGT) and Costco (COST). JCPenney rival Macy’s (M) announced plans earlier this month to close 125 stores.