Department store woes continue: J.C. Penney to close up to 140 stores

J.C. Penney announced Friday morning plans to close up to 140 stores and offer buyouts to 6,000 workers as the department-store industry sags in competition with online sellers and nimble niche retailers.

The company said Friday that it would shutter 13% to 14% of its stores, representing about 5% of its annual sales, and two distribution centers.

J.C. Penney has more than a dozen stores in Wisconsin. Among them are locations at Brookfield Square, Southridge in Greendale and Menomonee Falls, as well as in Pleasant Prairie, Green Bay, Grand Chute and Madison.

The company said it will announce in mid-March which locations will close.

A business model expert foretold J.C. Penney's problems in a C-Level column in the Milwaukee Journal Sentinel in October, when economist Kay Plantes said that the retailer's entry into the appliance sales market was not sustainable.

The cuts come amid mounting challenges for once-stalwart department-store chains such as Macy's and Sears, which are aggressively closing stores and shedding costs as shoppers flock to alternatives.

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J.C. Penney expects to save $200 million in annual costs in connection with the plan but will record an initial pre-tax charge of $225 million to cover the closure costs.

In a related move, the retailer said it would offer a "voluntary early retirement program" to about 6,000 workers, including corporate, store and supply chain workers.

Taken together, the cost cuts will "allow us to raise the overall brand standard of J.C. Penney" and invest in remaining stores, Penney CEO Marvin Ellison told investors.

Ellison said that many of the workers who are affected by store closures would be hired to fill jobs vacated by the employees who accept the buyouts.

J.C. Penney is a key competitor of Menomonee Falls-based Kohl's Corp. On Thursday, Kohl's announced that more than 300 full-size Kohl’s stores — about a third of the total — will be operating with reduced inventories and fewer fixtures.

Kohl's CEO Kevin Mansell said he doesn’t necessarily envision a future decline in the number of stores, but that more of them will be smaller.