Retailers JC Penney and Sears to cut thousands of jobs

JC Penney has not posted a profit in nine straight quarters

US retailer JC Penney said it plans to cut 2,000 jobs and close 33 stores as part of a cost-cutting exercise aimed at restoring profitability.

The money-losing department store chain hopes to save $65m (£40m) a year through the restructuring, which is expected to be completed by May.

Meanwhile, Sears is cutting more than 1,600 jobs in Canada and outsourcing some work.

The news came just days after Sears reported a 7.4% fall in group sales.

JC Penney has not posted a profit in over two years, and is forecast by analysts to lose more than $200m in the current quarter.

The stock fell by more than 1% in after-market US trading on Wednesday.

JC Penney chief executive Mike Ullman called the decision "difficult".

"As we continue to progress toward long-term profitable growth, it is necessary to re-examine the financial performance of our store portfolio and adjust our national footprint accordingly," he said in a statement.

"This important step addresses a strategic priority to improve the profitability of our stores and position JC Penney for future success."

Retail therapy

JC Penney's planned lay-offs account for about 2% of the Texas-based company's workforce.

Many of the company's "underperforming" stores that will be closed are at regional malls in Midwestern states such as Minnesota.

Mr Ullman is also trying to revive JC Penney's fortunes by restoring popular private-label brands and reinstating some sales commissions.

It has been a challenging time for US retailers, some of which have cut profit forecasts as restrained consumer spending impacted sales.

JC Penney's announcement follows a similar move by rival Macy's, which said earlier this month that it plans to cut 2,500 jobs and shutter five stores.

Sears added to the gloom with an announcement of 1,600 cuts, about 7% of its workforce. Most of the job losses will be made in customer call centres.

"The changes we are making to our customer contact centres will allow us to streamline the support structure of our organization while enhancing the overall customer experience," said Sears Canada president Doug Campbell.