J. C. Penney Co. said it will close three stores this spring and may announce more next month as new Chief Executive Officer Jill Soltau embarks on a broad evaluation of its footprint. The announcement briefly sent shares soaring in late trading.
J.C. Penney also reaffirmed its earlier guidance that it will generate free cash flow in fiscal 2018 and reduce its bloated inventory, an issue that has plagued the company in recent quarters.
This marks one of the first public moves by Soltau, who took the helm in October. The decision to close underperforming stores doesn’t come as a surprise, since she promised “quick action” in November for a company looking for a turnaround. She said she was taking a close look at the company’s fleet of about 860 stores. Investors will be happy to see the new chief making decisive actions. The retailer said it is “assessing locations that may not meet required financial targets” as well as ones where the real estate would be particularly valuable. More information on possible store shutdowns will be released with earnings on Feb. 28, the company said. Still, the company is saddled with almost $4 billion of debt, the majority of which comes due between now and 2025. While management has said it’s comfortable with the debt maturity profile, investors have been down on the company. Some of the retailer’s debt trades at less than half its face value.
The shares jumped as much as 8.3 percent to $1.31 in late trading after the announcement, before erasing the move. The stock lost two-thirds of its value last year as investor skepticism grew amid management upheaval.