Austin American-Statesman

J.C. Penney says it has cut jobs, offers muted outlook

- By Anne D’Innocenzio

Department store chain J.C. Penney says it has cut more than 300 jobs and reported disappoint­ing sales at establishe­d stores for the quarter that includes the holiday season. It also delivered a muted outlook, and its shares fell 8 percent.

The news Friday overshadow­ed strong profits as investors worried about Penney’s ability to remake itself in a changing retail market — especially after the good economy contribute­d to stronger results at chains such as Macy’s and Kohl’s.

J.C. Penney eliminated 130 positions across all department­s at its Plano, Texas, headquarte­rs, and said restructur­ing regional, district and store support teams to eliminate bureaucrac­y led to 230 job cuts. It estimated the cuts will save it $20 million to $25 million a year. It also made changes to its executive team.

The company, like many department stores, is trying to cut costs and make the chain better able to reach shoppers jumping back and forth between online and the stores. Department stores, which are heavily dependent on clothing sales, are seeing more competitio­n there as Amazon.com expands further into fashion and off-price chains like T.J. Maxx add more stores.

CEO Marvin Ellison told analysts Friday that the company has earmarked 300 mall locations where it will aggressive­ly beef up appliances, mattresses, furniture and workwear like overalls. That should increase market share gains as struggling competitor­s like Sears close.

Revenue at J.C. Penney stores open at least a year rose 2.6 percent, a tad below expectatio­ns for a 2.7 percent increase, according to FactSet. In contrast, Kohl’s enjoyed a 6 percent increase in sales at establishe­d stores, its largest such gain since 2001. Nordstrom saw a 2.6 percent increase in those sales, and Macy’s broke out of an almost three-year sales slump to post a sales gain of 1.4 percent at existing stores for the holiday period.

J.C. Penney is trying to operate as a more “modern company” — and, in many cases, it’s playing catch-up. The company has had extra challenges in restoring sales after a disastrous attempt to reinvent the company. It has since brought back major appliances like dishwasher­s and has expanded its in-store Sephora beauty shops.

It’s acknowledg­ed that it was behind in chasing the active and casual clothing trend. So it’s beefing up its selections of brands like Nike and Adidas. That should help perk up its clothing sales, which have been weak. It’s also continuing to rebrand its salon shops.

J.C. Penney is making some inroads in its e-commerce business. It increased its online product assortment by 50 percent last year and plans to add an additional 600,000 items online this year.

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