Sometimes, in business, you have to take a step back if you want to move forward with more momentum. For example, JC Penney Co reported a 3.5 percent decline in same store sales and a plan to close yet more stores but shares still improved. Indeed, after releasing this new data, JC Penney Co Inc saw share price jump as much as 4 percent in Tuesday’s extended session. Perhaps more fittingly, JC Penney also said it expects to end the fiscal year 2018 with a positive free cash flow, accompanied by lower inventory (in excess of $225 million, or 8 percent) and at least $2 billion in liquidity.
After this, though, JC Penney says they will start three new “preliminary” store closings as part of their extended and “ongoing evaluation” of the store portfolio, to occur over the spring months of 2019. This also includes assessing all locations to determine which ones are meeting their financial targets or represent a market opportunity for capitalization on real estate assets.
Now, it is important to look more closely at JC Penney’s closure schedule. The company is currently still operating 860 stores after having announced 138 closures in February of 2017. But the latest store closure announcement comes as newly-minted Chief Executive Officer Jill Soltau—who took office just a few months ago, in October—aims to turn around the company whose sales have been in decline for at least the past two year.
And, again, while sales are down and more store closures are eminent—and shares dropped by as much as 67 percent in 2018—shares were up more than 3 percent after hours on Tuesday.
None of this, however, should be that surprising. JC Penney’s struggles really only underscore the greater issue suffered by the whole of the brick-and-mortar retail industry. Indeed, traditional retailers have had quite a rough time competing with online retailers—like Amazon.com—and fast-fashion brands who offer affordable products—albeit, sometimes, cheaply-made—with convenient hours.
Sears Holdings Corp is probably the most notable example. Over the past two years, Sears has fallen prey among many others to collapse, with this company, in particular, now considering a revised takeover bid from billionaire investor and Chairman Edward Lampert to lancet liquidation efforts.