J.C. Penney Is Slashing Hundreds of Jobs in the Wake of a Disappointing Holiday Quarter
J.C. Penney (JCP) has cut about 360 jobs in its latest round of layoffs and reported less-than-stellar holiday season results that renewed worries about its prospects, sending shares plunging.
The company said comparable sales, a measure that excludes the 100-plus stores Penney has closed in the last year, rose 2.6% during the three months ended Feb. 3, its busiest quarter of the year. That was below the 2.9% analysts expected. Penney also forecast comparable sales would be unchanged to up 2% at most this year.
Shares fell 8% in premarket trading, on top of their 10% decline on Thursday.
Penney, looking to steady its finances after reporting a loss of $116 million in its last fiscal year, also announced it was eliminating 130 positions at its headquarters in Plano, Texas, just the latest round of layoffs in recent years, as well as cutting 230 jobs at the store and regional level. Penney last year shuttered 138 stores and recently announced it was closing a distribution center.
The big changes at Penney extended to the c-suite. Penney said the executive responsible for integrating stores and e-commerce, Mike Amend, was out, and announced several other changes to its top management.
Though Penney’s fourth-quarter profit came in above forecasts, it was a different story for its 2018 forecast: Penney expects full-year earnings of between 5 and 25 cents per share, well below analysts’ average forecast of 20 cents, according to Thomson Reuters I/B/E/S.
While Penney at least reported growth over the holidays, the results suggest lost market share, given that the overall industry outpaced it with 4% growth, as did rivals such as Kohl’s (KSS) and Target (TGT).
The numbers also suggest that Penney is not getting that much of a lift from the ongoing declines at Sears (SHLD), whose appliance business Penney has been eyeing for two years now. And earlier this week, arch-rival Macy’s (M) reported its first quarter of growth in three years.
What’s more, it’s 2018 sales growth expectation is below the overall industry forecast.
The company plans to redouble its efforts to extend its non-apparel categories (clothing is by far its biggest segment), all while improving its clothing offering. (In the fall, it took a major write-down after much of its apparel ended up unsold.)
“In 2018, we will intensify our market share efforts in Appliances, Mattresses and Furniture, while continuing to take steps to modernize our apparel assortment and omni-channel,” CEO Marvin Ellison said in a statement.