J.C. Penney to close 1 Colorado Springs store amid dozens nationwide

January 15, 2014 Updated: January 16, 2014 at 11:34 am
photo - Shoppers leave the JC Penney store at the Chapel Hills Mall Wednesday, Jan. 15, 2014. The national department store announced Wednesday that it will close stores nationwide include the Chapel Hills Mall store, leaving just two in Colorado Springs.  (The Gazette, Christian Murdock)
Shoppers leave the JC Penney store at the Chapel Hills Mall Wednesday, Jan. 15, 2014. The national department store announced Wednesday that it will close stores nationwide include the Chapel Hills Mall store, leaving just two in Colorado Springs. (The Gazette, Christian Murdock) 

J.C. Penney will close its nearly 20-year-old store at the Chapel Hills Mall on Colorado Springs' north side - one of 33 stores and 2,000 jobs the retailer will eliminate nationwide as it attempts to turn around its struggling business, the company announced Wednesday.

The Chapel Hills store is the lone J.C. Penney that will close in the state; the retailer will keep its stores at The Citadel mall in central Colorado Springs and at the First & Main Town Center on the city's northeast side.

The 33 stores will sell off their inventory over the next few months and close by early May, J.C. Penney said.

It could not immediately be determined how many employees the Colorado Springs store has, but a J.C. Penney spokesman said all workers "who do not remain with the company" will get separation benefits, assistance with relocating to nearby J.C. Penney stores and a two-day, on-site career training class.

J.C. Penney spokeswoman Anne Marie Bishop wouldn't provide details about the store's closing, saying only in an e-mail that the company continually evaluates locations "to determine whether there's a need to close or relocate under-performing stores."

"Reviews such as these are essential in meeting our long-term goals for future company growth. While it's never an easy decision to close stores, especially due to the impact on our valued associates and customers, we feel this is a necessary business decision," she wrote.

J.C. Penney opened at Chapel Hills in March 1995 and is one of several anchors at the 32-year-old shopping center. But at about 62,000 square feet, the Chapel Hills location was far smaller than stores at The Citadel and First & Main, which land records show are 208,517 square feet and 103,837 square feet, respectively.

The smaller size made the store feel "crammed" and gave the appearance the retailer didn't care about it, said Jay Carlson, a broker with Front Range Commercial in Colorado Springs.

"Just as a consumer, I don't think they've taken very good care of it," Carlson said. "It's probably been under-performing for awhile, and that kind of thing tends to perpetuate itself. When they don't invest in their store and redecorate and make it look good for consumers, then consumers quit coming. It just gets worse and worse."

Large segments of the area's population live east of the mall, and many can easily drive to the newer J.C. Penney at First & Main, which opened in 2007..

Patrick Kerscher, a broker with CBRE, said J.C. Penney leases its space at Chapel Hills, while it owns its store at The Citadel. It's easier for a retailer to negotiate an end to a lease than to sell off property - another reason J.C. Penney might have decided to close the Chapel Hills store, he said.

The loss of J.C. Penney looms as a challenge for Chapel Hills as it competes with other shopping centers. Chapel Hills needs to fill the space or risk turning off shoppers, said John Egan, a broker with NAI Highland Commercial Group.

"Shoppers don't like voids," he said. "They want to feel like they're in the next big thing."

But Victoria Harley, the mall's general manager, said in an email that it has "a tremendous amount of momentum," in spite of J.C. Penney's departure. In recent months, Chapel Hills has added trendy clothier H&M, a 13-screen Carmike movie theater complex and seven other stores. The mall is owned by New York-based Garrison Investment Group.

"Although we are saddened to see J.C. Penney leaving, this will present Chapel Hills Mall with yet another opportunity for positive change," Harley said. She declined to answer additional questions.

Penney, based in Plano, Texas, is trying to recover from massive losses and plummeting sales drops that occurred under former CEO Ron Johnson, who was ousted in April after being on the job for 17 months. The company then brought back former CEO Mike Ullman.

Penney has since reinstated the frequent sales events that Johnson ditched. It's also restored basic merchandise, particularly store brands like St. John's Bay, which were either phased out or eliminated in a bid to attract younger, more affluent shoppers.

Penney had been releasing monthly sales figures over the last few months, which had showed some improvement.

But on Jan. 8, it offered no figures regarding December sales when it came out with a brief release to update investors on its holiday performance. It said that it was "pleased with its performance for the holiday period," and that the holiday season showed "continued progress in its turnaround efforts." It also reaffirmed its outlook for the fourth quarter that was first announced in late November. At that time, it said that Penney's revenue at stores opened at least a year and gross profit margin will likely improve "sequentially" and year over year.

The cuts announced Wednesday should save the company more than $65 million annually. The company will take $26 million in pretax charges in the third quarter and $17 million in future quarters. Penney has 116,000 staffers and operates more than 1,100 stores. All the job cuts are related to the store closings.


The Associated Press contributed to this report.

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