JCPenney announces closures of 130-140 stores

[wnetmacman]

This morning, JCP announced that they were closing approximately 14% of the store base, which could amount to 130-140 stores.

Release here.

Another nail in the mainline department store coffin.

[Super S]

JCPenney is in an interesting position in that they have perhaps the biggest variety of store sizes of any department store. You have the big stores in some malls that are 100,000 square feet plus, smaller stores in smaller malls, and some longtime downtown storefronts such as Astoria, Oregon that have managed to stay open despite not being able to offer as much selection. I always worry about those stores simply because they just don't fit the model of most of their stores.

One problem that JCPenney has (as well as other chains) is the lack of variety in some of their larger stores. The 50,000 approx. square foot store near me in Kelso, WA is a joke as far as the mens department goes, and has a very limited selection. But I have noticed some of the larger stores also having this issue. They always say you can order online, but when people visit a store they usually want something right away. People wiling to wait just order at home. Some stores do not understand that.

Most people expect the larger stores to at least keep a wide range of clothing sizes in stock. Many stores don't. People stop going to those stores when they don't live up to their expectations.

[BatteryMill]

Well, that must be one step closer to having Amazon as the sole national retailer in the United States.

[storewanderer]

I suspect it is mostly the smaller town stores getting the ax.

I think this chain is a joke (frankly I'd rather see Sears survive than this chain; at least Sears still has an attempt at hardlines areas and actually staffs its hardlines areas) based on its mix, lousy quality of goods, very highly inflated retail pricing that is inflated like no other department store chain, terrible service, poorly laid out stores, extremely slow cash register system... this is a chain that almost everything is wrong with. I had the displeasure of shopping in one of their stores today and it reminded me why they are such a pathetic joke. They had what I needed to buy and I was in a hurry in a remote location, and I may have "saved" almost 40% after sale and coupon paying them $12.75 for one item (regular $20) and $53.55 for another item (regular $90).

But a quick UPC code search online reveals I could have gotten the exact same things at Target for 7.99 and 31.99 respectively (and those aren't even sale prices). Darn. Oh well.

[mbz321]

One interesting suspected store closure to mention is a fairly new JCPenney in the Willow Grove Park Mall in Willow Grove, PA. This store opened back in 2012 (former 3-level Strawbridge's, was supposed to become a Boscov's until they ran into financial difficulty and it never opened. JCPenney took 2 of the floors) under the previous CEO, so it was a hodge podge of different ideas that only chased shoppers away, and feels nothing like a JCPenney on the inside and more of an 'Old Navy' style of interior with a very odd layout. I wonder if some of the other closures will hit stores opened during the previous CEO. I'm hoping Boscov's may want to try again as they are a bit better financially now...I don't know who else would want the space as it is.

[architect]

Personally, I expect the majority of the closures to be in small markets, along with medium markets which have stagnated and show little growth potential. In addition, JCPenney still has plenty of stores at class C and worse malls which clearly need to go.

One of the biggest challenges which JCPenney faces is what to do with their small-town stores. Although their focus moving forward is clearly going to be their class A and B properties in large markets along with productive medium markets, many of their small market stores are still successful, yet need to merchandised differently. Should these stores potentially be spun off as a separate brand, so that the flagship JCPenney brand can be retained exclusively for stores which are new/renovated, and have a similar mid-market merchandise mix?

[Super S]

I don't know which stores will close but have a few thoughts about OR/WA...

McMinnville, OR: Looks to be a smaller mid 80s standalone build next to a strip mall. Just seems like an odd location.

Kelso, WA: Also a mid 80s build and has some similarities, except this one is in the struggling Three Rivers Mall. After Macy's closes this will be the last remaining department store (which was also an original anchor). The store is also on the small side, 50k square feet maybe.

Astoria, OR: This is an old downtown storefront, but doesn't have a lot of competition at this point.

Puyallup, WA: This one is actually split between two anchor spaces in the mall and it may make sense to consolidate back into one.

Vancouver, WA: Store in Vancouver Mall is showing its age a little and there is a newer standalone store in East Vancouver. One of the two could end up going away.

Seattle/Tacoma: From what I have seen those stores are in reasonably busy malls. None strike me as potentially closing, but it's worth noting many date to the 1960s.

Portland/Salem: Other than Vancouver just to the north, the stores are far enough apart and in busy malls. I don't expect any closures.

[storewanderer]

They can focus on A and B malls all they want but they are a D grade store. Numerous other retailers flock to those A and B malls which makes it harder to attract customers, and in the end the space in those malls is going to be too valuable to rent to D grade stores. A good number of their buildings are aging and need a lot of capital that I don't really think they can afford.

Their best bet is probably on the smaller, medium sized markets. Yes, they aren't flashy, but they have a built in customer base, limited competition, stores cost less to run, they are smaller and easier to remodel/maintain, and there tend to be a lot fewer "issues" in those stores, such as, theft issues involving numerous entry/exit points, large stores where it is a struggle to fill space and it is costly to tie up so much inventory in, malls setting minimum operating hours that may not be profitable to stay open during, etc.

JCP's roots were built on serving small and medium size markets. They should not abandon what got them where they are today.

Maybe in the end JCP and Kohls can merge.

[wnetmacman]

My bet on one closure will be Cortana Mall, Baton Rouge. Dillards has a clearance center store at this mall. Service Merchandise, Mervyn's, Macy's, and now Sears have all closed at this mall, with only part of the SM space being refilled. Dillard's only uses the ground floor. JCP will be the lone full anchor should they stay open.

[buckguy]

JCP's left their small town roots 2-3 generations ago and weren't totally w/o large market locations before WWII. Their small market stores, main street and mall are largely gone from the East & Midwest, so I'm guessing the remaining stores are more of a Western phenomenon and a small part of their store count.

I'm guessing that most of the closures will be at poor performing malls--they've slowly been leaving these locations for quite a long time.

Closing stores in dead/dying malls won't solve their fundamental problems in merchandising but it's probably a step in the right direction. I lack other people's nostalgia for malls-by their heyday they were pretty uniform in design, store mix, and price points which contributed to their decline and part of why it's almost impossible to revive a mall on the skids. If JCP kills off a few more weak malls it won't be as though they would have lived long with Penney's.