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Major retailers usher New Year with store closures

RBR Staff Writer Published 09 January 2015

Hit by the onslaught of a spurt in online shopping, major retailers such as Tesco, JC Penney and Macy’s have announced store closures, cutting thousands of jobs.

Department store chains have been particularly hit due to decreasing footfalls in stores and cutthroat competition from online retailers amid deep discounting.

While JC Penney announced 40 store closures in the US from its network of 1,060 stores by 4 April, laying off close to 2,250, Macy's said it would shut 14 of its 790 stores in the next few months, cutting more than 1,300 jobs.

The store closure announcements came even as both chains witnessed improvement in same-store sales. While JC Penney reported 3.7% rise in sales for the last two months of 2014, Macy's November-December same-store sales were up 2.1% year-on-year.

This is the second restructuring for JC Penney in a year when it closed 33 stores, axing about 2,000 jobs. Same goes for Macy's too, which also announced its previous closure programme exactly a year ago, closing five stores and cutting about 2,500 jobs.

Macy's is expected to save about $140m a year owing to its restructuring, reports BBC.

Meanwhile another giant in the grocery sector - Tesco- has also announced store closures. Over 43 unprofitable stores across the UK - more than half of which will be local convenience shops, known as Tesco Express - will be shut down.

In a series of cost-cutting measures, Tesco is also putting its previously announced plans of opening 49 new "very large" stores on the backburner.

Additionally, Tesco is closing its staff pension scheme, slashing spending of £250m, and reduce overheads by 30%.

Although sales at the retail giant improved in the six-week Christmas period, with grocery shopping up almost 13% on last year, and online clothing sales growing by more than 50%, Tesco is still reeling from the accounting scandal which broke last year amid two years of falling sales and profit warnings.

The retailer's overall comparable sales for the three months to the beginning of January were down by 2.9%. In the previous three months, sales had dropped by 5.4%.

As reported in BBC, other cost-cutting measures announced include closure of Tesco's longstanding headquarters in Cheshunt, Hertfordshire, and relocation of its main offices to Welwyn Garden City.

However, the retailer has not provided the exact count of job losses.