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The Honolulu Advertiser
Posted on: Friday, November 22, 2002

J.C. Penney closing Maui store

By Andrew Gomes
Advertiser Staff Writer

J.C. Penney Co. will close its Maui store early next year, completing a planned Hawai'i pullout by the nation's second-largest department store.

J.C. Penney has found a buyer and will close its store at Queen Ka'ahumanu Center in Kahului, Maui, early next year. The retailer already has announced closure of its two stores on O'ahu and one on the Big Island.

Timothy Hurley • The Honolulu Advertiser

J.C. Penney, which last month announced the closure of its two O'ahu stores and one Big Island location, said it had reached an agreement with another retailer to purchase its remaining store at Queen Ka'ahumanu Center on Maui.

J.C. Penney said its Hawai'i stores have been losing money for some time and all four will be closed by Jan. 10.

"It's a business decision for us," said Tim Lyons, a spokesman for the Plano, Texas, retailer undergoing a major nationwide turnaround effort. "Like the other (Hawai'i) stores, the Maui store has been unprofitable."

Sixty-eight employees at the Kahului store were informed of the decision this morning. They will be offered help finding other jobs and given severance benefits.

Lyons said the announcement was delayed because J.C. Penney, which owns the 86,000-square-foot space at the mall, had not reached an agreement to sell the space as of last month, when agreements were reached with landlords to close the other stores.

"There was no certainty an agreement would be reached," Lyons said.

According to Lyons, J.C. Penney probably would have continued to operate the Maui store beyond Jan. 10 had it not reached a deal to sell the space.

Lyons said the buyer was a retailer. A source familiar with the deal suggested it was Macy's, which has been looking to expand since acquiring the local Liberty House department-store chain last year.

An executive with Ka'ahumanu Center, which has a say in approving the sale, could not comment.

Macy's West representatives in Hawai'i and San Francisco said this morning they had not heard of an agreement to buy J.C. Penney's Maui store space, and attempts to reach Macy's executives were not successful.

Macy's already operates an 80,020-square-foot store at Ka'ahumanu Center, but it would not be unusual for the company to have more than one location in a mall — an arrangement it has at Kahala Mall and in other markets.

The average Macy's West store size is 200,000 to 250,000 square feet. Before the Liberty House takeover, even the smallest full-line department stores were about 100,000 square feet.

What will become of J.C. Penney's other Hawai'i stores is largely unknown. At Ala Moana Center and Prince Kuhio Plaza in Hilo, landlord General Growth Properties Inc. said yesterday it was still studying options.

General Growth has long desired to give Nordstrom space for a full-line department store at Ala Moana, but it is also considering carving up the J.C. Penney space.

At Pearlridge, local retailer Inspiration Furniture said yesterday it had purchased J.C. Penney's mall space and was considering options such as using some of it for a nearby showroom, leasing to a big-box retailer or breaking up the space for smaller tenants.

J.C. Penney has done business in the state since 1966. The chain expanded to six stores, but began cutting back in the 1990s, closing stores in Lihu'e and Kane'ohe.

In the last three years, the company has struggled to reverse sales declines and closed more than 10 percent of its stores nationwide, which today number a little more than 1,000.

Lyons said Hawai'i residents can order J.C. Penney merchandise over the Internet. The company also is planning to contract with a local retailer to set up in-store catalog desks where consumers can pick up catalogs and order, pay for and pick up merchandise.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.

Correction: The J.C. Penney store on Maui has 68 employees. A previous version of this story was incorrect.