The stock price of J C Penney Company is falling due to the report regarding its plan to close 40 stores this year.
In an interview with CNBC, J C Penney spokesman Joey Thomas said the stores that will be shut down account for 4% of the 1,060 stores of the company.
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J C Penney continues to review stores to meet long-term goals
Thomas said most of the locations will be close on April, and approximately 2,250 employees will be affected by the closures.
“We continually evaluate our store portfolio to determine whether there’s a need to close or relocate underperforming stores. Reviews such as these are essential in meeting our long-term goals for future company growth,” said Thomas.
Analysts have been urging J C Penney and other retailers to reduce store counts as they believed the companies have too many locations. Store closures allow retailers to cut costs amid an environment where an increasing number of consumers are now shopping online.
J C Penney reported comparable store sales growth
The decision of J C Penney to reduce its store count came after the retailer reported that its comparable store sales increased 3.7% during the nine-week period from November to December.
The company also expected that its comparable store sales growth in the fourth quarter will be in the upper end of its previous guidance range of 2% to 4%.
J C Penney gained more than 20% to $7.89 per share yesterday as investors reacted positively on its sales performance.
“Our highest priority over the last year has been to restore profitable sales growth at JCPenney. This holiday season was instrumental in that effort – and our teams delivered,” said J C Penney CEO Mike Ullman.
According to him, customers responded to J C Penney’s compelling promotions and great merchandize during the holiday season. He believed that their initiatives will help accelerate the continued growth of the company.
Analysts at Deutsche Bank maintained their Hold rating for the shares of J C Penney with $9 price target. On the other hand, Goldman Sachs analysts downgraded their rating for the stock to Sell with a price target of $5.50 per share.