After losing $2.6 billion in the past nine quarters, J.C. Penney has decided bringing back sales isn’t enough to undo the damage. The department store chain announced a plan Wednesday to close about 33 stores and cut 2,000 jobs, roughly 2 percent of its workforce, a move the company says will save about $65 million per year.
J.C. Penney already rattled investors this month when it declined to share holiday sales figures, saying only that it expects same-store sales for the fourth quarter to improve. Morningstar analyst Paul Swinand said the job cuts and store closures are clear signals that “not all is well.” But he also noted that a lot of the stores to be shuttered are in small malls, places that he said may be struggling overall to lure shoppers.
It’s no surprise that some of the company’s 1,100 or so stores are considered to be “underperforming.” The big question is whether any of them are performing as well as they could be, and whether even that would be enough in an age where a few Web searches is a lot easier than wandering through a department store in search of a wide basket of goods.
Given that, J.C. Penney executives should be talking about the locations or areas where the company may, in fact, be overperforming. What does success look like? Why should investors believe the storied brand can be restored to “its rightful place in retail,” as Chief Executive Officer Myron Ullman says?
Ullman should call out his best location. Highlight what’s selling there, and why. Share all the bullish metrics in detail and explain the plan to replicate that success across the country. Heck, give the store manager a raise and a seat on the board.
To say a few dozen stores are underperforming doesn’t mean much if all of them are.