Penney cuts 600 workers, 13 percent of HQ staff

Published April 5, 2012 4:36PM (EDT)

NEW YORK (AP) — J.C. Penney Co. said Thursday that it has laid off 600 workers, or 13 percent of the staff at its headquarters in Plano, Texas, as the department store chain looks to streamline its operations amid a major reinvention of the business.

The department store chain also will eliminate 300 more jobs at its Customer Call Center when it closes the center July 1.

The moves come as its new CEO, former Apple Inc. executive Ron Johnson, is transforming every aspect of Penney's business, from pricing to the brands it carries.

"We are going to operate like a start-up," said Johnson in a press release issued Thursday that made no mention of the job cuts. "We are going to be nimble, quick to learn, quicker to react and totally committed to realizing our vision to become America's favorite store."

The company had hinted that cuts would come when it told investors in January that it planned to reduce layers of management at its headquarters. The company had said then it was targeting $900 million in expense cuts to be completed over the first two years of its transformation. That included $200 million in savings from its corporate headquarters as well as $400 million in cost savings in store operations and $300 million in advertising expenses savings.

The changes are expected to reduce expenses below 30 percent of sales by the end of 2013.

Before the layoffs, Penney had 4,400 employees at its headquarters. Penney spokeswoman Darcie Brossart said the staffers were notified Thursday.

Prior to Thursday's cuts, Penney employed 134, 000 across its entire organization.

In recent years Penney has suffered because its core middle-income customers have been among those hardest hit by the weak economy. It's also failed to make its stores fun places to shop for many people. In its latest fiscal year ended Jan. 28, Penney, based in Plano, Texas, reported a loss of $152 million on revenue of $17.26 billion. That compares with a profit of $389 million on revenue of $17.76 billion in the year-ago period.

Revenue at stores open at least a year, considered a key indicator of a retailer's health, rose a slim 0.2 percent for the latest fiscal year. Rival Macy's Inc. enjoyed a 5.3 percent increase.

By Salon Staff

MORE FROM Salon Staff

Related Topics ------------------------------------------