Could closing stores actually pave the way for a return to a profitable business? According to recent developments in the market, JC Penny appears to be proving this true, as displayed by CNN Money . Up 20% this year, JC Penny closed out August at their highest since September of 2013.
There is still work to be done, however. The business is sitting not turning a profit. But on the bright side, it is outperforming competitors such as Kohl’s, Wal Mart, and Target, while on the same level as Macy’s and Dillard’s.
In January of 2013, the retailer announced it was closing 33 of its stores. And that may not be the last of its doors to shut. Commentators, such as JP Morgan’s BOSS, have speculated that closing somewhere in the neighborhood of 300 more of its 1, 100 stores would return the apparel store back to turning a profitable.
The problem within JC Penny arouse due to poor response as a result of a concept change. Departing from its brand of providing affordable, traditional clothes for members of the whole family, Penny attempted to keep up with the latest trends in fashion. The outcome was losing the interest of its core clientele.
Going back to its roots, Penny is offering customers coupons and promotions again. This seems to be working, as sales have increased, although nowhere near where they were in the past. Estimated to close this year with a 4.6% increase in revenue at $12.4 billion, the company is still down 30% from its closings in 2012.
Downsizing and revisiting what built the company to begin with may be the best option if JC Penny wants to see more dollars.