JCPenney Exiting Catalog Business -- Finally

jcpenney gift cardsJCPenney announced it's closing stores and winding down its catalog operations, a legacy business that seems outdated in today's landscape of online and mobile shopping.

In all, 26 stores will close, including five department stores and 20 outlet centers associated with the chain's catalog business. Two call centers and a custom-decorating factory will close and the number of in-store customer decorating departments will be reduced to 300 from 525.The closures are:
  • five JCPenney department stores in Morrow, Ga.; West Dundee, Ill.; Des Moines, Iowa; High Point, N.C.; and Culpeper, Va.;
  • one JCPenney Home Store in Duluth, Ga.
  • 19 outlet stores will close in 2011 and 2012.
  • one furniture outlet in Rancho Cucamonga, Ca.
  • two call centers in Grand Rapids, Mich., and Albuquerque, NM.
JCPenney plans to complete the wind down of its catalog business, including getting out of its catalog outlets.

This isn't a defensive move for JCPenney.

"We are focused on increasing profitability and accelerating our growth," says Mike Ullman, chairman and CEO, in a statement. "To achieve this, we undertook a thorough evaluation of our operations to ensure we are managing costs and allocating our resources to the strategies that will best drive both our top and bottom line, with the objective of delivering enhanced returns to shareholders."

Overall, JCPenney has been performing well and remains the rare retailer to successfully navigate the changing retail climate over the past two decades, and it continues to innovate within its stores, rolling out Sephora boutiques, staking claim to the Liz Claiborne line of women's wear and introducing MNG by Mango in the U.S.

Rather, the restructuring is all part of the chain's plans to grow and be relevant in a marketplace where mid-tier department stores are increasingly passed over by shoppers on their way to Target and Walmart. Sears is stills struggling to find its place and other once loved and successful brands like Montgomery Ward are long gone.

"The actions we are announcing today are significant steps in an ongoing process to ensure we are best managing costs and allocating our resources effectively to the strategies that will allow us to improve margins and drive profitable sales over the long term," says Ullman. "We see significant opportunities ahead in our core department store and online businesses as part of our Long Range Plan and we are well prepared to capitalize on them in 2011."

Bottom line, this is good for JCPenney, but will it be good for shoppers?
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