JC Penney Reported to Replace Full-Time Workers With Part-Timers

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As brick-and-mortar retailers work to cut costs as sales fall, one formula is to move full-time workers to part time. This can save on benefits and hopefully boost the bottom line.

According to a report in the New York Post, J.C. Penney Co. Inc. (NYSE: JCP) has cut a number of full-time workers from 35 hours a week to 25, which makes them part-time workers. According to the report:

Starting March 11, shoppers will find more associates in the stores over the weekend and other busy times as part of the staffing makeover.

Many full-time employees will be cut to 25 hours a week from 35, The Post has learned. New part-time hires will also get 25 hours a week.

“We are steering away from having any full-time associates,” a JCPenney insider told The Post.

Presumably, health care costs, which are a large portion of compensation, go out the door when the workforce is moved to part time.

The decision may be deemed smart among retail executives and J.C. Penney investors. The company’s stock is down 62% in the past two years to $4.20. Over the same period, the S&P 500 rose 43%. Many experts believe that J.C. Penney has seen its best days. Among the arguments against that is the same-store sales over the nine-week holiday period rose 3.4%, and J.C. Penney affirmed its 2017 guidance. However, that guidance is still at a level below how the company did in its heyday before e-commerce began to steal its sales.

J.C. Penney can keep more workers on the floor, at least in theory, when more are part time and have little or no benefit costs. The larger base of people on the floors does not solve the problem of whether customers show up.