Kohl’s and JCPenney are downsizing their supply chain real estate alongside various store closures that have went into effect this year.
Kohl’s is closing an e-commerce fulfillment center in Middletown, Ohio on Oct. 31, while JCPenney is shuttering a logistics warehouse in Haslet, Texas on Nov. 1, according to Worker Adjustment and Retraining Notification (WARN) Act notices filed with the respective states.
The department stores will be cutting more than 1,000 employees as part of the closures. For Kohl’s, 768 employees will be laid off at the 500,000-square-foot location, with 664 being material handlers and 33 being e-fulfillment supervisors.
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After the closure, which will initially begin on Sept. 12, Kohl’s supply chain network will operate 13 e-commerce fulfillment and distribution centers.
This marks the second warehouse closure for Kohl’s this year, with the department store also shuttering a San Bernardino, Calif. e-commerce distribution center in May after its lease ran out.
“This was a difficult decision, and one we did not take lightly,” said Michael Bender, Kohl’s interim CEO, in a statement. “Ultimately, it’s a necessary step to strengthen our operational discipline, drive greater cost efficiency, and ensure the long-term health of our business—for our customers, our associates, and the future of our company.”
While the Ohio center is closing, Kohl’s is currently expanding a 900,000-square-foot e-commerce fulfillment center in Plainfield, Indiana, according to chief financial officer Jill Timm in a late May earnings call.
JCPenney will lay off 296 workers as the retailer closes its 1.1 million-square-foot Texas warehouse, with the layoffs coming in two waves. The initial slate of 42 cuts will come between Aug. 1 and Aug. 14, while the second tranche of 254 cuts will take place between Nov. 1 and Nov. 14.
After the closures, JCPenney will operate eight facilities within its supply chain network. The department store still has another distribution center located nearby in the Dallas-Fort Worth metropolitan area in Cedar Hill, Texas.
“While this decision was difficult, it was necessary to build a stronger, more competitive company,” said a JCPenney spokesperson. “We appreciate the contributions of all affected associates, who had been previously notified of our decision, and are committed to supporting them with transition resources, including severance and benefits.”
The shutdown will come more than a year after the retailer committed to pouring $40 million into sorting upgrades at a Reno, Nev. distribution center.
Both retailers have been struggling in recent years as department stores continue to see a decline in retail market share, with JCPenney recently merging with SPARC Group to form Catalyst Brands in January. SPARC consists of JCPenney stakeholders including Simon Property Group, Brookfield Corp., Authentic Brands Group and Shein, and operates apparel brands like Aeropostale, Brooks Brothers and Eddie Bauer.
The department stores faltered in their most recent quarters reported in May, with Kohl’s net sales declining 4.1 percent year-over-year to $3 billion on a $15 million net loss. JCPenney’s net sales fell more than 9 percent to $2.1 billion, with the company incurring a $64 million net loss.
The layoffs will come after another month of slight contraction in warehousing employment. According to the Bureau of Labor Statistics (BLS) jobs report data released Friday morning, preliminary May employment across the warehousing and storage sector calculated 1,827,000 workers.
That figure is down 22,600 employees from the year prior, or down a seasonally adjusted 1.2 percent.
Supply chain tech firm Descartes cuts roughly 200 jobs
The distribution center closures aren’t the only recent examples of layoffs impacting some portion of the apparel supply chain.
Supply chain software provider Descartes Systems Group is cutting its global workforce by roughly 7 percent as part of a wider cost reduction plan. The layoffs were “generally across the board,” and affected “a little under 200 people” in the company, said Edward Ryan, Descartes CEO, during a Wednesday earnings call.
“We did it to make ourselves a healthier business going forward and put ourselves in a position where we can continue to make the kind of margins that the Street has come to expect from us in running our business on a daily basis,” said Ryan in the call, who noted that “things like AI have helped us maybe make some of these cuts a little easier.”
The plan, which is also designed to eliminate other operating expenses, will incur $4 million in the second quarter save $15 million in costs.
