Chief Executive Myron Ullman said in a statement the action
"addresses a strategic priority to improve the profitability of our
Penney is the second major U.S. retailer in as many weeks to
announce layoffs. Last week, Macy's Inc <M.N> said it was
eliminating 2,500 jobs. Those cuts will be offset over time as the
retailer plans to add positions to its online business, leaving
overall staffing levels unchanged at around 175,000.
Sears Canada Inc <SCC.TO> said on Wednesday it would cut this year
more than 1,600 jobs, or more than 7 percent of its workforce, as it
reorganizes and outsources some of its business.
Penney, which operates about 1,100 mid-market department stores in
the United States, is trying to stanch enormous losses and win back
shoppers after a 25 percent drop in sales in fiscal 2012 during a
failed attempt to go upmarket.
It has returned to the discounts that were long its hallmark and
brought back popular in-house brands.
Sales started ticking up in the autumn after nearly two years of
monthly sales drops but remain well below fiscal 2011 levels. A
press release last week with scant details on its December sales
results raised concerns that the turnaround stalled during the key
"It is not surprising to see them close stores given their financial
situation," said Maxim Group analyst Rick Snyder.
Analysts expect Penney to report a 70-cent per share loss for the
holiday quarter, according to Thomson Reuters I/B/E/S.
The company would not say whether further closings were planned, but
Ullman told Reuters in an exclusive interview last month that Penney
did not intend to significantly pare the size of its store fleet.
"There's no solution in taking a big chunk of stores and lopping
them off — that doesn't solve anybody's issue," Ullman said in the
[to top of second column]
A Penney spokeswoman on Wednesday said two of the 33 stores were
locations owned by the company, with the remainder being leased
stores. Penney leases its stores at over half of its mall locations,
according to an analysis last year by Green Street Advisors.
The closings, expected to be completed by May, will generate cost
savings of $65 million per year, beginning in 2014. Penney expects
estimated pretax charges of about $26 million in the current quarter
and another $17 million spread across future periods.
Stores closing include five in Wisconsin, where archrival Kohl's
Corp <KSS.N> is dominant, three in Pennsylvania, and two in Florida.
No stores in Penney's home state of Texas are slated to close.
The struggling department store chain had 116,000 employees as of
February 2, 2013. That was about 40,000 fewer than a year earlier as
the company tried to cope with lower sales.
Best Buy Co Inc <BBY.N> and Sears Holdings Corp <SHLD.O> are two
retailers that in recent years announced significant store closings.
Last week Macy's Inc <M.N> said it was closing five stores, but also
opening eight new locations.
Shares slipped 1.6 percent at $6.90 in after-hours trading. They
have fallen 70 percent since hitting a 52-week high last February.
(Reporting by Phil Wahba in New York;
editing by Bernard Orr)
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