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J.C. Penney Closing 33 Underperforming Stores, Eliminating 2K Jobs

NEW YORK (TheStreet) - J. C. Penney (JCP - Get Report) plans to close 33 under-performing stores as part of its continued turnaround strategy, saying it would rather focus its resources on the Plano, Texas-based department store's "highest potential growth opportunities."

The closings, to be completed by early May, will result in the elimination of approximately 2,000 positions. J. C. Penney had approximately 116,000 full-time and part-time employees, according to its most recent 10-K filing.

J. C. Penney has about 1,100 stores.

Shares were falling 0.86% to $6.95 in post-markets trading on Wednesday.

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J.C. Penney says the closings will result in annual cost savings of approximately $65 million, starting in 2014. It plans to take a pre-tax charge of $26 million for the current quarter and approximately $17 million in future periods. The remaining inventory in the 33 stores will be sold over the next several months.

"As we continue to progress toward long-term profitable growth, it is necessary to reexamine the financial performance of our store portfolio and adjust our national footprint accordingly," J.C. Penney CEO Myron 'Mike' Ullman said in a statement. "While it's always difficult to make a business decision that impacts our valued customers and associates, this important step addresses a strategic priority to improve the profitability of our stores and position JCPenney for future success."

The news comes as the struggling retailer spooked investors last week when it reported simply that it was "pleased" with its holiday sales performance. The company had reaffirmed its outlook for the fourth quarter of sequential and year-over-year improvement of fourth-quarter sales comps and in gross margin.

Last week Macy's (M - Get Report) launched a $100-million cost-savings initiative, which included cutting about 2,500 employees. Macy's reported the initiative despite its holiday two-month sales comps jumping 4.3%.

The company maintained its full-year earnings guidance of $3.80 to $3.90 a share, which excludes charges related to its new cost-saving initiative. Macy's also said for 2014, it expects comparable sales of 2.5% to 3% with full-year earnings per share between $4.40 and $4.50 a share.

Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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