JC Penney reported stronger than expected results for the fourth quarter on Friday and announced plans to shut down a large number of stores in 2017.
The retailer reported adjusted earnings per share for the quarter of $0.64, higher than analysts' expectations of $0.60 per share. Revenue came just barely below expectations at $3.96 billion against analysts' projections of $3.98 billion.
Comparable-store sales also missed slightly for the quarter, falling 0.7% from the same quarter last year. Analysts expected a drop of just 0.5%.
In addition to reporting earnings, JC Penney announced plans to "optimize retail operations" in 2017 which include shuttering between 130 and 140 store locations and closing two distribution centers.
"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," said CEO Marvin Ellison in a press release.
A decade after it was founded by then 22-year-old Sophia Amoruso in 2006, Nasty Gal filed for bankruptcy in November.
"Filing for bankruptcy is actually the most responsible decision for the business," Amoruso said at an event in Sydney, Australia when the news broke, the Independent reported.
The trendy fashion retailer had been through some tumultuous times in recent years. Amoruso stepped down as CEO in 2015. In her absence, the retailer laid off employees and former workers complained of a toxic environment.
After declaring bankruptcy, the retailer announced it would close 154 stores in the US and Canada.
"Back in the day, all of the cool kids had trendy brand names plastered across the front (or back) of their clothing. The trend has changed, and style today, perhaps encouraged by social media, embraces individualism and uniqueness," wrote Nicholas Rossolillo in finance publication The Motley Fool. "Online ordering and heavy discounting have also taken a toll on the industry, especially mall-based retailers. Aeropostale simply hasn't been able to adapt."
Kate Spade's sales have suffered in 2016 as tourists' visits declined and discounting grew more popular, making it harder to sell items at full-price.
"We have become increasingly frustrated by management's inability to achieve profit margins comparable to industry peers," Caerus' founder, Ward Davis, and managing partner, Brian Agnew, wrote.
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"We believe the relevance of our 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."
The reason for the shift, according to the release, is the tough competition from online retailers.
"We believe closing stores will also allow us to adjust our business to effectively compete against the growing threat of online retailers," said Ellison in the release.
Ellison also announced that in order to reduce the impact on workers, the company was instituting an early retirement program for roughly 6,000 employees.
Following the news, JC Penney's stock popped in pre-market trading before falling into the red. As of 7:50 a.m. ET, thr stock was lower by $0.07, or 1.02%, at $6.79 per share.