New J.C. Penney Co. Inc. (NYSE: JCP) CEO Jill Soltau has decided to close three stores this spring. That is not very many, given the company’s 860-store footprint in the United States and Puerto Rico. But the closings are not over.

In a statement the company made as part of its holiday same-store sales disclosure, J.C. Penney management added, the three locations will be:

… part of an ongoing evaluation of its store portfolio occurring over the next few months, which includes assessing locations that may not meet required financial targets or represent a market opportunity to capitalize on a beneficial real estate asset. Further information related to future store closings will be shared on Feb. 28 when the Company reports its fourth quarter and fiscal 2018 results.

And the results for the holidays were poor. Holiday sales dropped 5.4% from last year, when calculated by store. That means there must be stores that do not meet the requirements of what is likely to be an analysis of profitability.

Most of the rest of the company’s announcement about its fiscal year was positive. J.C. Penney will generate free cash flow for the year. It will cut inventory and end the year with liquidity of over $2 billion. However, based on its last earnings statement, the moves are not encouraging.

In the quarter that ended November 3, same-store sales dropped 5.4% and J.C. Penney lost $151 million. Revenue dropped 5.8% to $2.65 million. The figures were another indication that it has too many stores. It is not alone. Many other retailers, from Gap to Sears Holdings, have had serial store closures. As revenue falls at troubled retailers, the number of stores is the only substantial leverage they have on costs.

Ironically, J.C. Penney’s store count has dropped so low already that National Retail Federation ranks it as only the 34th largest retailer in America. Some of its competitors, like Kohl’s, have over 1,000 stores. Walmart has more than 5,300.

The most recent number of stores J.C. Penney closed was released in March 2017. The total of that cut was 138.

If J.C. Penney’s drops in revenue and same-store sales are any indication, it could close as many as 50 more stores. It is impossible for outsiders to see store-by-store data, but with an annual loss run rate of $600 million, it has to be in the dozens. And closing dozens of stores is what J.C. Penney will have to do.

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