Major department stores finally agree that they need less square footage in the U.S. Yet as each of these chains trims their fleets for the digital era, they're taking slightly different approaches.
J.C. Penney on Friday said it will close between 130 and 140 stores over the next several months, allowing it to invest in locations that are more meaningful to its top line. The decision marked a major pivot point for the company, which shuttered just seven stores in 2016.
Penney's long-anticipated announcement is in line with Macy's decision to close 100 locations, which will begin going dark this spring. CEO Terry Lundgren reiterated the importance of paring down the chain's fleet on a call with investors Tuesday, saying it will give the company a "healthy physical portfolio."
Meanwhile, both Kohl's and Macy's are opening stores related to emerging concepts, including Off/Aisle and Bluemercury, respectively.
"There's merit to each of these strategies," David Bassuk, co-head of the retail practice at AlixPartners, told CNBC.
Wall Street has been pressuring department stores to shrink their footprints amid competition from the internet and off-price retailers. The chains' struggles have been amplified by a glut of inventory, which has led to widespread discounts and lower profitability.
Yet while shrinking to grow sounds like a simple concept, it's much more complex to execute. Macy's, for example, incurred a $230 million charge in its fiscal fourth quarter related to store closures, severance, and other costs. The retailer meanwhile expects to give up $575 million in annual sales from its exit of 60-plus locations.