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J.C. Penney Posts Loss, Announces
Plans to Close Stores

Associated Press
PLANO, Texas — J. C. Penney Co. Inc. plans to close about 45 department stores and 289 Eckerd drug stores to turn its fortunes around.

The department store and catalog retailer also reported a net loss of $12 million, or 8 cents a share, in the quarter ended Jan. 29, compared with a gain of $207 million, or 77 cents a share, in the same period a year earlier.

Before one-time charges, including store-closing costs, Penney said its per-share profit fell nearly 40 percent, to 45 cents a share from 72 cents a year earlier. Analysts surveyed by First Call/Thomson Financial had expected 47 cents.

Revenue rose 5.2 percent to $9.8 billion from about $9.4 billion a year earlier. But, as the company had previously said, weak holiday sales forced dramatic price-slashing that reduced profit in the fourth quarter. Department-store and catalog sales fell 1.6 percent.

The company the store closing will save up to $300 million a year. Penney has about 1,150 department stores and 2,900 Eckerd stores.

Penney declined to provide an estimate of how many workers would lose their jobs. The closings are expected to take place over the next three months.

In recent years, Penney's stores have been battered by competition from aggressive rivals such as Kohl's department stores and discount chains such as Gap Inc.'s Old Navy.

Penney's stock has lost about three-quarters of its value in the past nine months.

But its shares were unchanged by late morning at $16.87 a share on the New York Stock Exchange.

Last month, new chief operating officer Vanessa Castagna announced moves to centralize store merchandise-stocking decisions and spruce up the appearance of the department stores, including reducing the amount of "clutter."

Chief executive James E. Oesterreicher said weak profitability "has caused us to take a hard look at department stores and drugstores that are underperforming and lack future strategic fit." He said the company has hired outside experts to identify cost-saving steps.

Penney said today it would take charges of about $530 million to close 40 to 45 department stores and 289 Eckerd drug stores that are performing badly. The drug stores are generally smaller, low-volume stores that were acquired from other operators over the past several years, the company said.

For the year ended Jan. 29, Penney said its net income was $336 million, or $1.16 a share, down 43 percent from $594 million, or $2.19 a share the year before.

Oesterreicher also said the company will proceed later this year with its delayed plans to issue a publicly traded tracking stock for Eckerd.

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