A national retailer, JCPenney, is pulling out of its Southlake Mall location, along with five other JCPenney locations in the eastern half of the country.
The move comes as the company takes steps to shake loose investments in "areas of the business that no longer contribute, meaningfully, to its financial performance," according to a press release issued Monday, J. C. Penney Company, Inc.
The closures are part of a wider effort to reorganize J. C. Penney Company, Inc., to make it more profitable in the future, the company announced. It is also expected to close two call centers in Michigan, and New Mexico, one Custom Decorating Fabrication facility in California, and reduce, from 525, to 300, of "Custom Decorating" studios. JCPenney also will "wind down" its catalog business, the company announced.
In a written statement, JCPenney Chief Executive Officer, Myron E. Ullman, III, said the company is focusing on "increasing profitability and accelerating our growth," after completing an evaluation of the company's operations, costs and resource allocations.
In addition to the Southlake Mall store, JCPenney announced it will also close the underperforming department store and J. C. Penney Home Store locations in Duluth, Culpeper, Va., Des Moines, Iowa, High Point, N.C., and West Dundee, Ill. The company said the six stores to be closed "no longer meet the company's profitability threshold," and are therefore being shut down.
"It is always difficult to make decisions that impact our associates, and we are committed to treating them fairly," Ullman said. "As we continue to position our Company for the future, we determined that these steps are necessary to capitalize on the growth opportunities we see ahead, while we ensure we are managing costs appropriately, and continually enhancing the profitability of our operations."
JCPenney spokesman, Joey Thomas, said the stores are scheduled to close on June 1. He added that, the most recent information available listed the Southlake Mall location as having 147 employees. He said more information about the liquidation of store merchandise will be released as the closing date nears.
Ken Northrop, the general manager for the JCPenney Southlake Mall store, said store associates were told of the closing on Monday morning. "Right now, we're focusing on helping our associates transition to new careers," Northrop said.
It was not clear Monday how the changes at JCPenney will affect its outlet store, in Forest Park. The company has 19 outlet stores "which carry a significant amount of catalog merchandise," according to a press release from the company. Thomas said the catalogs have been replaced the company's web site, www.JCPenney.com/, as a way to sell additional merchandise, outside of a traditional department store setting.
As part of its reorganization efforts, the company announced Monday it is "exiting its catalog outlets" as part of the move to shut down its catalog business, but it did not outright say the outlet locations will be closed. That is because, according to Thomas, decisions have not been made about what to do with the properties.
He said each outlet location will be handled on a case-by-case basis, leaving open the possibility that the company could stay in Forest Park. "It may include selling the store to another outlet company, or converting the [outlet] locations to a traditional [JCPenney] department store, or just closing the location," Thomas said.
The closing of JCPenney's Southlake Mall location was not completely unexpected.
Northrop said he did not know the closure was coming, but he was not surprised the news, because the store's sales have been declining for the past few years. "We had several years where business was less than profitable," he said.
City leaders recently received advance warning that the closing was imminent, though. During a Jan. 14 presentation on economic development in the Southlake Mall area, representatives from the Noell Consulting Group told city leaders to expect the clothing retailer to shut down it's Morrow store.
Noell officials predicted at the time, based on behavior patterns they have seen from JCPenney in the past, the Southlake Mall location would likely close eventually, because the company opened a newer location at the South Point retail and entertainment center, in McDonough, in 2008.
"It's unlikely, that they'll keep two stores that are that close in proximity [to each other]," said Noell Consulting Group Vice-President, David Laube, after the Jan. 14 presentation to city leaders.
Northrop said business at the Southlake Mall location was hit hard the opening of the store at South Point. "Quite a bit of our business has transferred to that store over the last three years," he said.
JCPenney spokesman, Joey Thomas, said he could not comment on the finances of the Southlake Mall location, when asked about competition from the South Point store.
JCPenney's closure leaves Southlake Mall with only two "anchor" stores - Sears and Macy's. Southlake Mall originally had four "anchor stores," but one spot was left vacant when Macy's and Rich's merged several years ago.
The city has since bought that fourth anchor spot, and converted it into the Morrow Conference Center.
Michael McLaughlin, the planning and economic development director for the City of Morrow, and a spokesperson for Chicago-based General Growth Properties, which owns Southlake Mall, could not be reached for comment.