Department-store operator J.C. Penney announced Wednesday that it will be closing 33 underperforming stores and cut 2,000 jobs across the country in an effort to increase profit, CBS News reported.
This initiative will allow the company to focus its resources on its highest potential growth opportunities, the company said in a statement. They expect save approximately $65 million in annual costs beginning in 2014 from these actions.
"As we continue to progress toward long-term profitable growth, it is necessary to reexamine the financial performance of our store portfolio and adjust our national footprint accordingly," Myron Ullman, III, chief executive officer of J.C. Penney, said in a statement . "While it's always difficult to make a business decision that impacts our valued customers and associates, this important step addresses a strategic priority to improve the profitability of our stores and position J.C. Penney for future success."
They announced that Remaining inventory in the closing department stores will be sold over the next several months, with final closings expected to be complete by early May. Associates who do not remain with the Company will receive separation benefits packages, the company said in a statement.
Meanwhile, the Company is continuing its plans to open a new store location later this year at the Gateway II development in Brooklyn, N.Y.
CBS News reported that experts speculate that Penney's holiday season sales were lower than they expected and "that the chain needs to do even more to recover from a turnaround plan that has had disastrous results."
"It was a season where they realized that they had to do more to reconnect with the customers they've lost," Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors, told CBS News.
The company also expects to receive estimated pre-tax charges of approximately $26 million in the fourth quarter of fiscal 2013 and approximately $17 million in future periods.
However, experts believe this initiative may not be enough to help J.C. Penney climb up from its downward spiral, according to 14U News.
"The closing of 33 stores sounds like not all is well," Paul Swinand, an analyst for Morningstar Inc. in Chicago, told I4U News. "It's also not a massive restructuring."