NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) releases KCP special report entitled “With Sears, Macy’s and JCPenney, Two is Bad Company and Three’s a Crowd.” Late last week, JCPenney officially announced plans to shutter between 130 and 140 stores along with two distribution facilities over the near term. While returning to profitability in 2016 for the first time in six years, the company believes aggressive action is required to streamline operations and fuel sustainable, long-term growth. The strategic move, which was first intimated by the company in January 2017, is part of an initiative to shed unproductive store locations that generate minimal net cash flow, require extensive capital expenditures, and have significantly lower comparable sales than the company average. JCPenney will release the full list of closures in March 2017 and operations at the individual locations are anticipated to cease by the end of June 2017.
JCPenney is the third major department store chain over the past year to announce nationwide closings. A total of 140 store closings would account for 13.7% of the company’s 1,012 store portfolio (as of January 30, 2016). Macy’s announced the closure of 100 stores in August 2016 and identified 68 of the locations in January 2017. The announced Macy’s closures accounted for 11.5% of the department store’s 870 locations (as of January 30, 2016). In late 2016 and early 2017, Sears Holding Corporation announced the expected closure of 150 stores including 108 Kmart locations and 42 Sears locations. The initiative is one of many aimed at boosting the company’s liquidity, which had declined to $432.0 million through the end of the third quarter of 2016. As of September 30, 2016, Sears Holdings operated approximately 1,500 Sears and Kmart stores.
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