J.C. Penney Co. Inc. (NYSE: JCP) is scheduled to report fiscal first-quarter earnings on May 13, and by the look of it, the good news from the fourth quarter will not be repeated. Then the company posted a profit and same-store sales growth of more than 4%. Now, it was so desperate to reduce costs that it cut employee hours in the last half of April to save an average of around $8,000 per store.

According to a report in the New York Post, poor sales in April forced J.C. Penney to take unprecedented cost-cutting steps in order to maintain its bottom line. The company also banned the use of corporate credit cards and forbade more price markdowns during the period. Full- and part-time employees had their working hours reduced.

The Post cited an internal memo:

We have an expense challenge for the month of April and are asking all stores to do their fair share by closely monitoring all expenses.

An unidentified employee gave the paper a broader view:

Employees expect reduced hours in the slow months of January and February but not in April. When the quarterly figures are released, they do not represent the financial struggles and low morale of the thousand[s] of associates company-wide.

On one hand one might conclude that J.C. Penney’s workers are lucky to still have a job and stockholders are lucky that their shares are still worth something. On the other hand, actions like this demonstrate just how shaky the house of cards may be.

Just a week ago Barron’s ran a story that claimed J.C. Penney stock could double. The stock closed at $9.28 a share on Friday and reached a high of $9.75 on Monday. By Thursday’s close the shares traded at $8.93. It is true that J.C. Penney is in better shape now than it was a year ago, but one thing to remember about the company’s same-store sales is that they were down so far than any improvement looks like up.

The company has made progress with its balance sheet as well, cutting its long-term debt from $5.2 billion to $4.8 billion in the past year. But that gets harder to do if sales falter.

Shares closed down 1.1% on Thursday at $8.93 and have tumbled 6% in Friday’s premarket to $8.39. The stock’s 52-week range is $6.00 to $11.99, and the consensus price target is $11.84. The highest target is $20 and the lowest is $5.

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