Struggling department-store operator J.C. Penney announced it will cut 2,000 jobs and close 33 stores as it tries to get back on the path to profitability.
The news raises concerns that Penney’s holiday season sales were not what the company hoped for and that the chain needs to do even more to recover from a turnaround plan that has had disastrous results.
J.C. Penney Co., based in Plano, Texas, said earlier this month that it was pleased with its holiday results but declined to give sales figures, raising worries among Wall Street analysts about how the season actually fared.
The cuts announced Wednesday should save more than $65 million annually. The company will take $26 million in pretax charges in the third quarter and $17 million in future quarters. Penney has 116,000 staffers and operates more than 1,100 stores. All the job cuts are related to the store closings.
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None of the stores targeted for closure is in Kansas.
The holiday season is crucial since it can account for anywhere from 20 percent to 40 percent of a retailer’s annual sales. But at J.C. Penney, the stakes are higher.
Penney is trying to recover from massive losses and plummeting sales drops that occurred under former CEO Ron Johnson, who was ousted in April after being on the job for 17 months. The company then brought back former CEO Mike Ullman.
Penney has since reinstated the frequent sales events that Johnson ditched. It’s also restored basic merchandise, particularly store brands like St. John’s Bay, which were either phased out or eliminated in a bid to attract younger, more affluent shoppers.