JCPenney to wind down catalog, close some stores
Will streamline call center, decorating operations
Gary Evans -- Kids Today, 1/25/2011 12:35:46 PM
PLANO, Texas -- JCPenney said today it plans to wind down its catalog and outlet operations, close six retail stores and streamline its call center operations and custom decorating business.
The move is expected to save the Top 100 retailer $25 million to $30 million, or eight cents a share, during its first full year of implementation, the company said.
"We are focused on increasing profitability and accelerating our growth," said Mike Ullman III, chairman and CEO. "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, with the objecting of delivering enhanced returns to shareholders."
The shutdown of the catalog and outlet operations will occur over the next two years and will include 19 outlet stores, which the company said carry a "significant" amount of catalog merchandise, the company said.
Penney also said it is consolidating its furniture outlet business, closing one store in Rancho Cucamonga, Calif., and leaving two remaining outlet stores to handle surplus furniture from its retail operations.
The realignment of its call center operations includes the closing of facilities in Grand Rapids, Mich., and Albuquerque, N.M., and consolidating activity involving its retail store and online customers in existing facilities in Columbus, Ohio, Pittsburgh and Milwaukee.
As part of reorganization of its custom decorating business, the company will close its Sacramento, Calif., custom decorating fabrication facility, which will leave one remaining facility in Statesville, N.C., where staffing will be increased. Also, the company will reduce 525 in-store custom decorating studios to 300 studios in key market.
JCPenney stores will close in Morrow, Ga., Dundee, Ill., Des Moines, Iowa, High Point, N.C., and Culpepper, Va. One JCPenney Home Store in Duluth, Ga., also will close.
The series of actions are estimated to incur one-time charges of about $30 million, or eight centers per share, in the fourth quarter of 2010, and about $20 million, or five cents per share, during 2011 to reflect the transition.
According to Furniture/Today's Top 25 U.S. Furniture and Bedding Retailers, JCPenney had furniture and bedding sales of $620 million in 2009, down 10.8% from the previous year's $695 million.
"The actions we are announcing today are significant steps in an ongoing process to ensure we are best managing costs and allocating our resources effectively to the strategies that will allow us to improve margins and drive profitable sales over the long term," said Ullman. "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."
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