Ahead of an expected further improvement in US employment figures Friday, department store giants JC Penney and Macy’s both announced store closures and related …
Ahead of an expected further improvement in US employment figures Friday, department store giants JC Penney and Macy’s both announced store closures and related job cuts Thursday. Macy’s shares fell 3.2% to $65.62 in after-hours trading while JC Penney fell 1.38% to $7.84 on the news.
JC Penney Co is to close around 40 stores this year and cut around 2,250 jobs, in a bid to improve profitability. Rival Macy’s, meanwhile, also announced a major restructure to its operations, affecting more than 2,000 workers nationwide, including closing 14 department stores.
Most of the Penny stores, located in malls, will close by April 4. The retailer currently operates around 1,060 stores nationwide.
The announcement comes just two days after JC Penney reported a same-store sales rise during the all-important Holiday shopping season.
A year ago, the retailer announced plans to close about 33 stores and cut around 2,000 jobs.
Separately, Macy’s said Thursday it plans a radical restructure of its merchandising and marketing laying off of thousands of workers in response to changes in the way customers shop in stores and online. It expects to save about $140m a year, starting in 2015.
On the upside, the retailer also said it plans to open two new locations, and hopes its overall workforce of about 175,000 will remain level as it eventually picks up staffing in other functions, including the possibility of launching a Macy’s off-price business.
The news came as Macy’s reported same-store sales rose 2.7% during November and December, in line with its expectations. It is also standing by its Q4 earnings expectations, excluding restructuring costs. It will book about $100m-$120m in charges in Q4 2014 charges.
Macy’s also said it now expects Q4 same-store sales to increase 2.5-3%, from its previous view of 2-3%.
Meanwhile, both Macy’s and upscale sister brand Bloomingdale’s are restructuring their merchandising and marketing functions into one unified entity, designed to accelerate both store and digital growth.
Macy’s expects the changes will help each banner better develop and present its merchandise seamlessly across buying channels and present a single omnichannel view to shoppers in all product categories.
“Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smartphones. We must continue to invest in our business to focus on where the customer is headed – to prepare for what’s next,” said CEO Terry Lundgren.
To that end, Macy’s and Bloomingdale’s are contracting its store and field operations in each of its 830 stores in a bid to drive growth, which will result in the loss of about 2,200 jobs.
The 14 closing stores, meanwhile, account for around $130m in annual sales.
Macy’s is scheduled to report results for the quarter on February 24.