NEW YORK, NY / ACCESSWIRE / April 6, 2017 / Traders News Source, a leading independent equity research and corporate access firm focused on small and micro-cap public companies is issuing a comprehensive report with no obligation on J. C. Penney (JCP). The apparel and home furnishings retailer recently announced its plan to close two distribution facilities and approximately 130 - 140 stores over next few months. This strategic decision is aimed towards helping the Company to align its brick-and-mortar presence with its Omni channel network, thereby redirecting capital resources to invest in locations and initiatives that offer the greatest revenue potential.
The total store closures represent approximately 13 - 14 % of Company's current store portfolio, less than 5% of total annual sales, less than 2% of EBITDA and 0% of net income. The annual cost savings resulting from these strategic decisions, are estimated at approximately $200 million. Nearly all impacted stores are expected to close in the second quarter of 2017.
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Management confirmed that closing stores would also enable JCP to effectively compete against the growing threat of online retailers. The company believes that it is essential to retain those locations that present the best expression of the J. C. Penney brand and function as a seamless extension of the omnichannel experience through online order fulfillment, same-day pick up, exchanges and returns amongst others.
The annual cost savings resulting from these strategic decisions, primarily occupancy, payroll, home office support, corporate administration, and other store-related expenses, are estimated at approximately $200 million. During the first half of 2017, the Company expects to record an estimated pre-tax charge of approximately $225 million, primarily lease termination obligation expenses, non-cash asset impairments and transition costs, in connection with this initiative.
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SOURCE: Traders News Source