J.C. Penney Co. Inc. is upping the count on its store closings.
The bankrupt retailer, as part of its “store optimization strategy,” disclosed Monday evening it will close 13 stores on top of the 136 units being liquidated. However, even more closings will be revealed.
“We do anticipate a third round of store closures, but the date has not been decided yet,” a Penney’s spokeswoman told WWD. There’s no word yet on how many stores will be disclosed in the third round, though some retail experts believe Penney’s needs to close at least a couple of hundred stores in order to survive.
The 13 stores are considered a second phase in the retailer’s optimization strategy. The liquidation sales on those 13 units are expected to begin on or around July 3.
Last week, Penney’s commenced closing sales at 136 stores across the country. “These decisions were made based on a comprehensive evaluation of our retail footprint and a careful analysis of store performance and future strategic fit for J.C. Penney,” said the retailer’s spokeswoman. Those liquidations are seen taking 10 to 16 weeks to complete.
On June 4, Penney’s disclosed the first phase of 154 store closures, and noted that additional phases of store closing sales would occur. The company said it would focus on its strongest stores and e-commerce.
Though Penney’s hasn’t revealed the timing of a third wave of closings, it’s expected that the Dallas-based department store chain will make the call soon. Bankruptcy enables retailers to get out of weak locations without penalty.
The $11 billion Penney’s operates about 850 stores.
“At this time, nearly all of our stores have reopened after temporarily closing due to the coronavirus pandemic, and we are thrilled to have shoppers back in our stores with many safety precautions in place,” the spokeswoman said Tuesday.
“The tougher senior management is on identifying weaker performing stores, the better the outcome will be. They can always add stores, if they get the business back in line,” said Allan Ellinger, senior managing partner of MMG Advisors. “Penney’s has to prune itself, and shed all those unproductive stores, at least 20 to 25 percent.”
Ellinger added that Penney’s is still “a very recognizable and respected name, and there is still a consumer who puts trust in the name, and a lot of malls are clearly dependent on J.C. Penney as an anchor store. The industry would like to see it survive.”
According to Craig Johnson, president of Customer Growth Partners, “Penney’s will have to drop hundreds of stores to be economically viable and that will be a huge issue for some mall operators.
“There is a revival path,” Johnson said. “It’s not easy. Penney’s is a nice, white-bread, middle-American brand, but the concept of the department store is much changed now. It’s not relevant to Millennials. Penney’s was always a point of destination for younger new households, a good place for good value.”
Penney’s is considering selling itself, and there has been speculation that the Simon Property Group, Brookfield Properties, Sycamore and Amazon are among those that have taken interest, to one degree or another. Penney’s filed for bankruptcy on May 15.