Noting the “dramatically increasing fulfillment costs” that many pure-play e-commerce operations are experiencing, Ellison says the company is pleased with the double-digit growth of jcpenney.com, “and how leveraging our brick and mortar locations is enabling us to offset the last-mile delivery cost. We believe the future winners in retail will be the companies that can create a frictionless interaction between stores and e-commerce, while leveraging physical locations” in order to minimize the growing operational costs of delivery.

As a result of the store actions, JCPenney will close its Lakeland, FL distribution center in early June, transferring its operations to the company's logistics facility in Atlanta. It's also in the process of selling its supply chain facility in Buena Park, CA.

PLANO, TX—Even as it returned to profitability for the first time in six years, J.C. Penney Co. said Friday it would scale back its brick-and-mortar retail operations. The department store chain will close between 130 and 140 stores over the next few months, along with two distribution facilities, with a view toward reallocating capital to its best-performing locations and its omnichannel network. The locations slated to go dark were not immediately revealed.

“In 2016, we achieved our $1-billion EBITDA target and delivered a net profit for the first time since 2010; however, we believe we must take aggressive action to better align our retail operations for sustainable growth,” says chairman and CEO Marvin Ellison. “During the year, it became evident the stores that could fully execute the company's growth initiatives of beauty, home refresh and special sizes generated significantly higher sales and a more vibrant in-store shopping environment.”

Ellison says the relevance of Penney's brick-and-mortar portfolio will be driven by “the implementation of these initiatives consistently to a larger percent of our stores. Therefore, our decision to close stores will allow us to raise the overall brand standard of the company and allocate capital more efficiently.”

Further, he says, closing stores will enable JCPenney to adjust its business and effectively compete against “the growing threat” of online retailers. “Maintaining a large store base gives us a competitive advantage in the evolving retail landscape since our physical stores are a destination for personalized beauty offerings, a broad array of special sizes, affordable private brands and quality home goods and services. It is essential to retain those locations that present the best expression of the JCPenney brand and function as a seamless extension of the omnichannel experience through online order fulfillment, same-day pick up, exchanges and returns.”

Noting the “dramatically increasing fulfillment costs” that many pure-play e-commerce operations are experiencing, Ellison says the company is pleased with the double-digit growth of jcpenney.com, “and how leveraging our brick and mortar locations is enabling us to offset the last-mile delivery cost. We believe the future winners in retail will be the companies that can create a frictionless interaction between stores and e-commerce, while leveraging physical locations” in order to minimize the growing operational costs of delivery.

As a result of the store actions, JCPenney will close its Lakeland, FL distribution center in early June, transferring its operations to the company's logistics facility in Atlanta. It's also in the process of selling its supply chain facility in Buena Park, CA.