J.C. Penney Company, Inc. (NYSE:JCP) announced plans to close 33 underperforming stores in a desperate bid to shore up its profitability.

J.C. Penney JCP

Describing the decision as a “strategic initiative to advance turnaround,” the troubled retailer said the closing of the stores would result in the reduction of 2,000 jobs.

J.C. Penney holiday sales not that hot?

The announcement follows on its press release last week that said “the Company is pleased with its performance for the holiday period, showing continued progress in its turnaround efforts.” That rather opaque announcement was devoid of hard figures and was criticized for being “bizarre and far from confidence-inspiring.” Analysts concluded that all was not well with the company and that it was likely hiding something. The stock plunged over 9% the day of that release.

Sterne Agee analyst Charles Grom said in a note, “If J.C. Penney Company, Inc. (NYSE:JCP) had good things to say about business trends, the company would have shared more. The slope of the improvement at J.C. Penney needs to be much greater than it is currently tracking,” as reported by Reuters.

Savings of $65M

Yesterday’s announcement of the closure of the stores appears to cement these apprehensions. The retailer hopes to save $65M through the action, and will incur pre-tax charges of about $26M in Q4 FY 2013 and $17M in subsequent periods.

“While it’s always difficult to make a business decision that impacts our valued customers and associates, this important step addresses a strategic priority to improve the profitability of our stores and position J.C. Penney Company, Inc. (NYSE:JCP) for future success,” said CEO Mike Ullman in the press release.

Losses piling up

J.C. Penney Company, Inc.(NYSE:JCP) has reported losses of $2.6B in the past nine quarters. For the quarter ending January 14, analysts are expecting EPS of (-$0.70) and revenue of $3.96B.

However, analysts at Piper Jaffray took a positive view on the store closings, citing improving sales as well as margins, together with abating liquidity issues. Piper is Overweight on J.C. Penney and has a price target of $11.

Stores on the hatchet list

The list of the stores slated for shutdown is here. Two of these are said to company-owned, while the rest are leased. The company says it plans to open a new store location later this year at the Gateway II development in Brooklyn, N.Y.