JCPenney Was Ready to Close 138 Stores. Now, They Might Keep Them Open Longer


JCPenney

JCPenney sure fell on some pretty hard times in the last decade. Like most retailers, the department store chain lost the bulk of their business to Amazon and other online retailers. At the same time, a handful of cheaper, trendier clothing retailers surged in popularity as JCPenney’s popularity waned. They’re also unpopular with the younger, fashion-forward generation, who often see the company as a relic of shopping’s past.

These and other factors contributed to the company’s steady decline. Foot traffic in JCPenney’s stores sharply decreased, as did in-store and online sales. The company’s stock ($JCP) never recovered from the 2007-2008 financial crisis, decreasing in value by 92.72% in the last ten years.

JCPenney is winding down.

To keep the lights on and most of their stores open, JCPenney announced the pending closure of 138 nationwide locations. Investors were big on the company’s closure plan, as it would help them restructure, spend less money, and give them time to operate as a profitable, successful business. The company’s stock even increased by over 2%, showing that investors really thought closing stores would help the company in the long run.

Yet the plan to close 138 stores had an unpredictable side effect.

People are going to JCPenney again.

Since JCPenney announced massive store closings, those stores started to see increased foot traffic and “better-than-expected sales,” according to the company. As was the case with previous store closures, it is likely that many shoppers are trying to capitalize on store-ending deals before their local JCPenney disappears. Other shoppers are likely visiting the store for pure nostalgia reasons, as the closures reminded them of a time when JCPenney was the place to shop. Regardless, these visitors are the reason why the company will keep the 138 locations open for longer than expected.

All 138 stores will still close, and soon.

Though JCPenney is seeing a nice bump in sales, they still need to close these locations to stay afloat. Instead of doing so this week, however, the stores will begin their “going out of business” sales in late May and turn off their lights by the end of July. This will let those nostalgic shoppers get their last-minute purchases in before it’s too late.

Should you invest in JCPenney?

JCPenney, like most of the retail industry, is in recovery mode. Their locations are closing because the company can’t afford to keep them open without taking a massive hit. In the coming months and years, they’ll need to figure out how to adapt and survive in the current retail climate. This could mean focusing on fewer but better-performing stores or a more robust and attractive online storefront.

If you think the recent uptick in traffic proves the company can pull its way out of a decade-long decline, be sure to do your research before you invest. If you think the retail market will only get worse, you might want to invest elsewhere.


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