US department store chain JC Penney is scaling back its expansion plans for next year as the global credit crunch takes hold.
The firm will slash its capital expenditure to US$650 million (£326m) from US$1 billion (£501m) this year. It has cut store openings by more than half, with 20 new stores to open next year compared with original plans for 50 every year to 2011.
JC Penney has also cut store refits, down from 65 to 15 a year over the next three years. Total inventories will be below 2007 levels but it expects year-on-year growth in gross margin in the third and fourth quarters.
Chairman and chief executive Mike Ullman said: “We have just completed our strategic planning process for the coming year, a period that we expect to remain very challenging.
“We are taking additional steps under our Bridge Plan to effectively balance support of the merchandise and marketing initiatives that differentiate JC Penney with the goal of maintaining a strong financial position. To this end, we will reduce new store openings and renovation from 2008 levels and continue to focus on rigorously controlling inventory levels and operating expenses.”
JC Penney has 1,074 stores in the US and a substantial mail-order business. Sales for 2007 were US$19.9bn (£10bn).