It’s been a rough few years for J.C. Penney
. With a few highly touted, but quickly reversed changes in pricing policy and advertising approach behind it, the retail chain is resorting to closing stores and eliminating employee positions to save money.
In a press release issued Tuesday
, J.C. Penney Co. announced that it would close 33 “underperforming” stores, which will result in about 2,000 lost jobs. The reasoning, according to the release, is some big savings:
These actions are expected to result in an annual cost savings of approximately $65 million, beginning in 2014. In connection with this initiative, the Company expects to incur estimated pre-tax charges of approximately $26 million in the fourth quarter of fiscal 2013 and approximately $17 million in future periods.
The release isn’t particularly sympathetic toward employees who are losing jobs, nor is it overtly optimistic. It’s clinical, like a doctor offering options to a severely ill patient. It quotes company CEO Myron E. (Mike) Ullman III:
As we continue to progress toward long-term profitable growth, it is necessary to reexamine the financial performance of our store portfolio and adjust our national footprint accordingly. While it's always difficult to make a business decision that impacts our valued customers and associates, this important step addresses a strategic priority to improve the profitability of our stores and position JCPenney for future success.
’s Kyle Stock argued in a column
that the company should have been a bit more hopeful in its release:
J.C. Penney executives should be talking about the locations or areas where the company may, in fact, be overperforming. What does success look like? Why should investors believe the storied brand can be restored to “its rightful place in retail,” as Chief Executive Officer Myron Ullman says?
The store closings don’t appear to be the only change J.C. Penney is making to improve its standing. Bloomberg reports
that the chain is bringing back sales commissions after doing away with them last year.
[RELATED: Ragan's new distance-learning site houses the most comprehensive video training library for corporate communicators.]
points out that, of the 33 stores slated to close, five are in Wisconsin, the state where the chain’s so-called archrival, Kohl’s, is headquartered.
J.C. Penney operates about 1,100 stores nationwide. The company recently appeared, for the second year in a row, on 24/7 Wall St.’s list of the most-hated companies in the country. The company has “probably made more operational and strategic mistakes than any other large publicly traded company in America,” the site’s report states.