Obamanomics Update: J.C. Penney, Macy's to shut stores, lay off scores

1/9/2015
Gary Strauss, USA TODAY

A customer leaves a J.C. Penney store in New York. J.C. Penney said Tuesday that same-store sales for November and December were up 3.7%.(Photo: Mark Lennihan, AP)

After posting holiday shopping sales on the high end of muted expectations,department store chains J.C. Penney and Macy's head into 2015 with a focus on smaller operations and fewer employees.

J.C. Penney JCP is shuttering 39 underperforming stores and laying off 2,250 workers, while Macy's announced a restructuring that will shift workers from 830 Macy's and Bloomingdale's stores and close 14 Macy's stores. The moves could cut up to 2,200 employees as the company adapts to shifting consumer tastes and shopping patterns.

"Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smartphones. We must continue to invest in our business to focus on where the customer is headed — to prepare for what's next," Macy's CEO Terry Lundgren said. His comments came the same day the retailer reported a 2.7% rise in same-store November/December sales.

Macy's also announced a new 2016 Macy's store in Los Angeles and a new Blomingdale's store to open in San Jose by late 2017. The moves come nearly a year after Lundgren announced 2,500 layoffs and five store closures in January 2014.

Shares of Macy's fell 2.7% to $65.95 in after-hours trading after hitting a new closing high of $68.30 Thursday as Wall Street extended Wednesday's broad rally.

Penney said mall-based stores in 19 states will close by early April. Word of the store closures — which represent about 4% of the middle-market chain's stores — came just days after Penney said holiday sales rose 3.7%.

"We continually evaluate our store portfolio to determine whether there's a need to close or relocate underperforming stores,'' said company media relations manager Sarah Holland. "Reviews such as these are essential in meeting our long-term goals for future company growth. While it's never an easy decision to close stores, especially due to the impact on our valued associates and customers, we feel this is a necessary business decision."

Penney shares closed up 0.8% at $7.95 Thursday.

Consumer psychologist Kit Yarrow, author of Decoding the New Consumer Mind, says, "Retail is in a massive transformation period. Consumers have lost their enthusiasm for trolling through massive stores hunting for a bargain. They can do that online.

"The only big department stores that will remain relevant to consumers are those that incorporate tricks and treats into the shopping mix — like product offerings you can't find online, special demonstration or sampling, cushy or fun relaxation areas."

J.C. Penney "is bloated with deteriorating real estate at a time when people want smaller, easier to navigate, technology-enhanced shopping experiences,'' Yarrow says.

"Poor Penney. I bet I'm not the only Boomer that really, really wants to shop there for the sake of their heritage, but can't," Yarrow says.

Contributing: Nanci Hellmich 

Penney stores facing closure:

Georgia

Dalton: Walnut Square Mall
Duluth: Gwinnett Place Mall
Lagrange: Lagrange Mall

Iowa

Mason City: Southbridge Mall
West Burlington: Westland Mall
Waterloo: Crossroads Shopping Center

Illinois

DeKalb: Northland Plaza
Quincy: Quincy Mall

Indiana

Michigan City: Marquette Mall

Massachusetts

Hanover: Hanover Mall
Taunton: Silver City Galleria

Michigan

Adrian: Adrian South Mall

North Carolina

Asheboro: Randolph Mall
Elizabeth City: Southgate Mall
Statesville: Signal Hill Mall
Wilson: Parkwood Mall

New Jersey

Vineland: Cumberland Mall

New York

Kingston: Hudson Valley Mall

Ohio

Columbus: Eastland Mall
Greenville: North Towne Plaza
Springfield: Upper Valley Mall

Oregon

North Bend: Pony Village Mall

Pennsylvania

Chambersburg: Chambersburg Mall
Hummels Wharf: Susquehanna Valley Mall
Media: Granite Run Mall
State College: Nittany Mall
York: York Galleria

Rhode Island

Providence: Providence Place Mall

South Carolina

Aiken: Aiken Mall
Murrells Inlet: Inlet Square Mall

South Dakota

Aberdeen: Lakewood Mall

Texas

Brenham: Market Square Mall

Virginia

Manassas: Manassas Mall
Williamsburg: The Marquis

Vermont

Rutland: Diamond Run Mall
St.Albans: St.Albans Shopping Center

Wisconsin

Oshkosh: Aviation Plaza
Racine: Regency Mall

Shawano, Shawano Plaza

Macy's stores facing closure:

Arizona

Phoenix: Metro Center

California

Cupertino: Cupertino Square Mall

• Woodland Hills: Promenade
• Woodland Hills (furniture gallery)
• ​Florida
• Port Richey: Gulf View Square
• Michigan
• Southfield: Northland Center

North Carolina

Greensboro: Wendover

New Jersey

Ledgewood: Ledgewood Mall

New York

DeWitt: ShoppingTown Mall

• Schenectady: Rotterdam Square
• Ohio
• Columbus: Kingsdale Shopping Center
• Richmond Heights: Richmond Town Square
• Springfield: Upper Valley Mall
• ​Tennessee
• Memphis: Southland Mall

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