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4-Traders Homepage  >  Equities  >  Nyse  >  J C Penney Company Inc    JCP

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J.C. Penney Will Pay As Much As $38 Million In Severance Costs

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04/09/2012 | 05:25pm CEST
   By Karen Talley 
   Of  
 

J.C. Penney Co. (>> J.C. Penney Company, Inc.) will take a $30 million to $38 million pretax charge in connection with layoffs the retailer announced last week.

The majority of the staff, some 600, were let go from the company's Plano, Texas, headquarters. The other staffers, about 300, are at a call center in Pittsburgh the company will close June 29.

Penney expects to take most of the charges in the first quarter, which ends April 28.

The steps are being taken as J.C. Penney tries to make itself into a leaner organization as it reorganizes operations around a new selling approach. Penney wants to change from a promotionally-driven retailer to one focused on presentation and everyday value.

Chief Executive Ron Johnson, who joined the company in November from Apple Inc. (AAPL), has said that Penney will operate more like a "start-up," with fewer layers of management and more accountability.

Johnson in January laid out an ambitious plan that involved carving stores into a warren of specialty shops. Penney revealed additional details of the strategy last week, saying locations will contain stores within stores, shops and boutiques, with new merchandise offered on a monthly basis.

But overhauling the chain's fleet of 1,100 stores poses costly challenges. Penney has been in heated competition with rivals such as Macy's Inc. (>> Macy's, Inc.) and Kohl's Corp. (>> Kohl's Corporation) and recently announced it is adding products from Martha Stewart Living Omnimedia Inc. (MSO) to its roster, a move that spawned a lawsuit from Macy's, which said it has exclusive rights to Martha Stewart merchandise.

Penney plans to reduce annual costs by $900 million by the end of 2013, including $200 million in savings from the corporate headquarters, $400 million in store operations and $300 million in advertising. In February, Penney said it swung to a loss in its fiscal fourth quarter, as the retailer shouldered costs tied to its revamped pricing strategy.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; [email protected]

Stocks mentioned in the article : J.C. Penney Company, Inc., Kohl's Corporation, Macy's, Inc.
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Financials ($)
Sales 2018 12 340 M
EBIT 2018 494 M
Net income 2018 150 M
Debt 2018 3 446 M
Yield 2018 -
P/E ratio 2018 11,78
P/E ratio 2019 10,12
EV / Sales 2018 0,42x
EV / Sales 2019 0,39x
Capitalization 1 722 M
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Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 8,82 $
Spread / Average Target 58%
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Managers
NameTitle
Marvin R. Ellison Chairman, President & Chief Executive Officer
Edward J. Record Chief Financial Officer & Executive Vice President
Therace Risch Chief Information Officer & Executive VP
Robert Gerald Turner Independent Director
Leonard H. Roberts Independent Director
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