JC Penney leaving Salisbury Mall, closing doors in Rowan

  • Posted: Thursday, March 21, 2013 12:30 a.m.
JC Penney in the Salisbury Mall is said to be closing for good. According to store employees, this summer will mark the end of JC Penney's presence in Salisbury. Scott Myers/Salisbury Post
JC Penney in the Salisbury Mall is said to be closing for good. According to store employees, this summer will mark the end of JC Penney's presence in Salisbury. Scott Myers/Salisbury Post

SALISBURY — Another original anchor at the Salisbury Mall is pulling out of the troubled shopping center.

J.C. Penney will leave the mall in August and close its doors in Salisbury, the company confirmed Wednesday.

The retail giant’s departure from the mall has been rumored for months, following plans by Belk and Big Lots to leave the shopping center at the corner of Jake Alexander and Statesville boulevards. Both Belk and Big Lots will relocate near Interstate 85 this year.

But J.C. Penney, which has struggled financially since the failure of a new marketing strategy, will close the Salisbury location in early August and not relocate. The store employs about 35 people, most part-time.

“Each year, we evaluate our store portfolio to determine whether there’s a need to close or relocate underperforming stores,” spokeswoman Sarah Holland said.

J.C. Penney is positioning itself for future growth, she said.

“While it’s never an easy decision to close a store, especially due to the impact on our valued team members and customers, we would not have moved forward with this difficult decision if we did not believe it was absolutely necessary,” Holland said.

With J.C. Penney’s departure, the mall loses three original anchor tenants, including Belk and Rose’s.

Mall owner Igal Namdar did not respond to questions from the Post. His Namdar Realty Group, a New York real estate company, bought the mall for $2.5 million last year after it went into foreclosure.

Badcock Furniture recently signed a 10-year lease to fill the long-vacant Goody’s location in the mall (originally Rose’s), scheduled to open this summer. The Mulberry, Fla.-based company with about 40 stores in North Carolina could not be reached for comment about J.C. Penney’s departure.

Previously, a Badcock spokesperson told the Post the company wasn’t deterred by Belk and Big Lots’ impending departures.

“We think the mall is still viable,” said Bill Pou, Badcock’s executive vice president of retail operations.

Mayor Paul Woodson agrees.

“I think the mall will survive,” Woodson said. “But I think the mall is going to have to transform itself into more of a discount-type mall and get away from the high-end stores like Penney’s and Belk.”

Debt service on the mall must be quite low because Namdar bought the property at such a bargain price, Woodson said. He can afford to charge less in rent than someone who paid $13 million or $14 million for a mall, Woodson said, which should help him attract new tenants.

Woodson also predicted J.C. Penney will return to Rowan County, possibly in a proposed retail development in Summit Corporate Center.

Hutton Growth One has reserved property at the county-owned business park on Interstate 85 for 18 months. It plans to use that time to court retailers, including a “well-known” anchor store, for a new shopping center.

Chattanooga, Tenn.-based Hutton is building the nearby expansion of the Wallace Commons shopping center at Klumac Road and I-85, where Belk plans to relocate this fall.

Rowan County residents spend an estimated $271 million a year outside the county on retail and consumer services. Called “retail leakage,” the statistic proves huge demand for retail in Rowan, said Robert Van Geons, executive director for RowanWorks Economic Development Commission.

“There is enough demand to fill every vacant retail space that we have here,” Van Geons said.

Van Geons said he’s optimistic the mall owner can land more tenants like Badcock.

In addition to the furniture store, Namdar’s leasing director announced last week that he’s signed leases with a martial arts studio, arcade, snack shop, cell phone accessory kiosk and an expansion of an existing clothing store.

“Anytime we lose an employer, that’s something that we hate to see in Rowan County,” Van Geons said. “I for one will miss having J.C. Penney here.”

J.C. Penney’s decision to close its doors in Salisbury comes after a one-two punch of falling mall attendance and the corporation’s financial struggle.

The Plano, Texas-based department store chain reported a net loss of $552 million for its fiscal fourth quarter.

Total sales for the fourth quarter decreased 28.4 percent to $3.884 billion. Comparable store sales declined 31.7 percent. Internet sales through jcp.com were $315 million in the fourth quarter, decreasing 34.4 percent from last year.

For the full fiscal year ending Feb. 2, J.C. Penney reported a net loss of $985 million or $4.49 per share.

Many longtime customers abandoned the store when new CEO Ron Johnson, the former retail guru at Apple, took over and began to transform the company to appeal to a younger demographic. He did away with coupons, discounts and doorbusters, and by late February, the company’s stock had fallen 46 percent.

Despite the losses, Johnson remains at the helm and struck a positive tone in a recent earnings report.

“Sales and customer traffic were below our expectations in 2012, but as we execute our ambitious transformation plan, we are pleased with the great strides we made to improve J.C. Penney’s cost structure, technology platforms and the overall customer experience,” he said.

Looking ahead, “we are working towards reconnecting with our core customer while attracting new customers to J.C. Penney,” Johnson said.

Contact reporter Emily Ford at 704-797-4264.

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