J.C. Penney closing some stores; Ackman on board
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Jan 24,
PLANO, Texas (AP) -- J.C. Penney Co. is closing some stores, outlets and call center locations and continuing to work on an exit from its catalog business in an effort to streamline operations and boost profits.
The department store operator also said Monday that Vornado Realty Trust Chairman Steven Roth and activist investor William Ackman will become board members. Penney's enacted a "poison pill" in October after both Ackman and Vornado took large stakes in the company.
Ackman and his hedge fund Pershing Square Management have pushed for major changes at retailers he holds stakes in, such as Borders Group Inc. and Target Corp.
In pre-market trading Monday, J.C. Penney shares jumped 3.5 percent, or $1.05, to $31.39.
In an interview on CNBC, Ackman said J.C. Penney is a great company and a great brand, but could be a better retailer. He noted that the company has had success with its Sephora boutiques, but that sales per square foot over the past 10 years have not made progress and margins are off.
Penney reported in November that its gross profit margin slipped to 39 percent from 40.6 percent in the third quarter due to heavy discounting and the discontinuation of its big catalog.
Penney plans to close six underperforming stores and two call center locations. It is also reorganizing its custom decorating business, which includes closing a custom decorating fabrication plant in Sacramento, Calif., and shifting to managing 300 decorating studios instead of 525 of its current in-store studios.
The retailer's exit of its legacy catalog business includes shuttering 19 outlet stores that carry a large amount of catalog merchandise. Penney announced in November 2009 that it would stop publishing its twice-yearly "big book" catalogs. The company will also close one furniture outlet store in Rancho Cucamonga, Calif.; it will have two remaining such stores.
The company did not disclose how many job cuts would be involved in the actions, which will take place during the course of the year.
J.C. Penney currently runs more than 1,100 department stores in the U.S. and Puerto Rico.
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