J C Penney Company Inc (NYSE:JCP) might have to close more than 300 stores in the next three years in order for it to run effectively and survive tough times.
JC Penney has already shut down some of its retail stores and the same fate is expected to happen for more of its stores before it reaches its optimum number of stores. The firm is currently running over 1,000 stores. Unfortunately, things seem to be getting tougher for the company. Its stock plummeted by 8 percent on Monday after it reported poor quarterly earnings on Friday. The firm also reported that its same-store dropped by 3.5% this year compared to sales it made in 2016.
“700 is likely the ultimate ideal fleet size [for J.C. Penney] based on current retail store volumes. Thus, we expect aggressive ongoing store closures over the next 2-3 years,” wrote Kimberly Greenberger, an analyst at Morgan Stanley (NYSE:MS).
Analysts worried that JC Penney may not survive for long
JC Penney is one of the many struggling retail stores that have been going through a tough time trying to stay afloat but analysts think that most of these firms might not survive for long. The company believes that downsizing might be one of the best solutions towards ensuring its survival as well as a sustainable future. The company reported that its off-mall locations performed better than those located in malls.
Online shopping is becoming more accepted and as such, it is becoming more of a threat to traditional shopping in brick and mortar stores. Other retail companies including Macy’s Inc (NYSE:M) and Kohl’s Corporation (NYSE:KSS) have also reported poor quarterly earnings, thus adding to concerns about their future.
Despite the poor overall performance, JC Penney CEO Marvin Ellision stated that there has been significant performance in various categories including fine jewelry, furniture, activewear, appliances, among others. The shutdown of some of the company’s stores also means there will be job cuts. However, it is all part of improving future performance.
JC Penney stock closed the latest trading session on Monday at $4.34 after a 0.21 percent decline from the value at the previous close.