Perhaps because it knew that its earnings report would leave investors less than pleased with the quarterly and full-year results, J.C. Penney Co. Inc. (NYSE: JCP) also announced this morning that it would eliminate about 130 head office jobs and another 230 at the group, regional and district levels.
Cutting costs often offsets bad news on the earnings front, but J.C. Penney’s move may be too small to have made much difference to investor reactions to the company’s tepid results.
In the announcement of the head office job cuts, the company said they were “part of ongoing efforts to manage expenses, simplify operations and streamline workload in support of the Company’s long-term growth and profitability.”
Regarding the 230 other job losses the company said: “This restructure eliminated bureaucracy, reduced support positions and reallocated store headcount to customer-facing positions.”
J.C. Penney estimated that the job cuts will result in annual savings of $20 million to $25 million.
Executive vice-president for J.C. Penney’s omnichannel efforts, Mike Amend, is leaving the company and his duties will be assumed by Therace Risch, currently J.C. Penney’s chief information officer and chief digital officer.
The company also announced other management changes: Joe McFarland has been named executive vice-president and chief customer officer; Jodie Johnson has been promoted to head of merchandising for women’s, beauty and family footwear; and James Starke has been named head of merchandising for men’s, children’s, home and jewelry. Johnson and Starke will report to McFarland.
If this sounds a bit like reshuffling the deck chairs on the Titanic that could be because it is. J.C. Penney needs to sell more stuff, not fire a few people to save $20 million. That’s simply preposterous.
J.C. Penney’s stock traded down more than 11% early Friday, at $3.45 in a 52-week range of $2.35 to $6.40. The 12-month consensus price target is $3.95.