Today, J.C. Penney Company, Inc. (NYSE:JCP) revealed that it would lay off 350 employees from its corporate headquarters in Plano, Texas as part of its restructuring and cost cutting measures to boost profitability and its ability to compete with business rivals.
The company previously announced plans to cut 900 jobs in Texas and Pittsburg and to reduce its expenses by $900 million by the end of 2013. Ron Johnson, CEO of J.C. Penney and former executive of Apple Inc. (NASDAQ:AAPL) and Target Corp. (NYSE:TGT) stated that J.C. Penney will operate like a start-up company. He explained that the retail company needed streamlining to move forward. The first 600 jobs were axed last April. Johnson is trying to make JCP more like the Apple store.
Ron Johnson said that the 350 job cuts would allow the company to achieve its target $900 million cost reduction by the end of 2012, one year ahead of its initial schedule. Johnson states, “One of the most challenging tasks for any leadership team is to reorganize a company. In April, we began right-sizing our headquarters from a people perspective to align our teams with jcpenney’s new business model. The actions taken today mark the final phase of those efforts.”
Furthermore, he said that cutting jobs is a difficult decision but it is for the long-term interest of the company and its stakeholders. He explained the company is implementing a “simplified process, removed unnecessary works and reduced layers” to allow the management to make better and speedy decisions.
When the J.C. Penney started its restructuring process, the company introduced new brands and marketing strategies such as the discontinuation of its coupons, keeping the low prices for its products and implements sales twice a month to get rid of out-of season merchandise. In addition, analyst also observed that the retail company has been hiring executives from Apple and Target.
Bill Ackman, the legendary hedge fund value investor, and CEO of Pershing Square Capital, is the largest shareholder of JCP. He thinks that there is still value in the company, but the market is not seeing it that way currently.
During the early morning trading, J.C. Penney’s stock value decline by almost 6% at $20.73 per share. The company’s share is down by 43% for the past three months.