Plano, Texas J.C. Penney Co. will further slow the pace of new department store openings and cut capital spending next year because of the weak economy. The company said Wednesday it now plans 20 new or relocated stores next year, down from the 36 it expects to open in 2008.
Penney had once planned 50 new stores a year through 2011, but backed away from that goal in April, when it set the target of 36 new locations this year.
In a statement, chief executive Myron E. Ullman III said that the chain expects next year "to remain very challenging for the American consumer.”
Ullman said the company just completed its strategic planning for 2009 and decided to cut capital spending to about $650 million, compared with $1 billion expected this year and $1.2 billion last year.
The reduced store openings will help the company cut capital spending. Penney also will renovate fewer existing stores -- 10 to 15 next year, down from the 20 it expects to renovate this year. The company had originally planned to refresh 65 stores per year through 2011.
Penney said it still planned to open its first store in Manhattan late next year. It believes the location, which will be located across from the flagship Macy’s store, will be the sales leader in the chain.
Besides slowing expansion, Penney said it would continue to control inventory levels below 2007 levels by the end of the back-to-school season.
Ullman said the moves could help blunt the impact of the "difficult retail environment" and boost gross profit margins over the year before. But even after controlling operating expenses, the company said it would face pressure from lower sales.