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J.C. Penney To Close More Stores, Q4 Sales Slump.

With the fourth quarter results for J.C. Penney (( JCP ) in, the retailer is seeing a decrease in sales and has announced that it will be closing an additional 27 underperforming stores.

J.C. Penney said it will close 18 stores in addition to the ( three locations that it previously announced in January. The company also announced that it will close nine home and furniture stores.

The decision to close the locations is part of the retailer's move to align the company with what it calls its "omnichannel network" to provide the "greatest long-term value potential."

The stores that ( J.C. Penney has decided to close present a real estate opportunity for the company, require significantly more capital, or have minimal cash flow. The company also said the stores to be closed stores are operating "at a much higher expense rate given the lack of productivity."

Employees at the closing stores will receive separation benefits as well as outplacement services, according to J.C. Penney. The affected stores are expected to close in the second quarter of 2019.

J.C. Penney's shifted sales decreased 4 percent with an unshifted loss of 6 percent versus the same period in 2018. Its fiscal year sales decreased 3.1 percent, giving the retailer a net loss for the year of $255 million or $0.81 per share. Fourth quarter net income was $75 million or $0.24 per share.

Total net sales for the fourth quarter brought in $3.67 billion compared to the $4.05 billion from last year 6 down 9.5 percent. From the fiscal year 2017 to 2018, the company saw a decrease in total net sales of 7.1 percent from $12.55 billion to $11.66 billion.

Top sales categories for the company included jewelry, women's apparel, children's apparel, and men's apparel, which Jill Soltau, chief executive officer at J.C. Penney, said is a key business for the company that it is taking "meaningful steps to drive improvement."

"As we forge a path to sustainable profitable growth, our decisions included eliminating non-core and low gross margin product categories, significantly reducing unproductive inventory and continuing the revitalization of our women's apparel business," she said.

"While we are pleased with these actions, we know we need to move faster to reestablish the fundamentals of retail, build capabilities focused on satisfying our customers' wants and needs and ensure that our digital and store operations operate seamlessly to provide an experience that wins with customers."

"We have much work to do to position JCPenney for success and create long-term value for our shareholders, however, our unwavering focus and discipline is already enabling meaningful progress," Soltau added.

J.C. Penney also said it expects a pre-tax charge of approximately $15 million. For fiscal 2019, it is anticipating positive cash flow.

Shares of J.C. Penney stock were up over 23 percent as of 10:46 a.m. EST on Thursday.

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Publication:International Business Times - US ed.
Date:Feb 28, 2019
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