JCPenney Cuts 10% of HQ Staff as Turnaround Prospects Falter

By Adam Blair — February 25, 2013

Bad press and just plain bad news continue to swirl around JCPenney, further dimming hopes for a turnaround at the iconic department store retailer that will report its Q4 financial results February 27. The company has cut 300 staffers at its Plano, TX headquarters, about 10% of the total working there, according to published reports. These latest firings, first reported by the New York Post, follow earlier reductions in a headquarters head count that had once stood at 4,800.

Apparently, however, many of those working at the HQ didn't have very heavy workloads. In an unusually candid interview on the front page of today's Wall Street Journal, COO Michael Kramer said that during January 2012 the Plano executives had collectively watched five million YouTube videos during work hours, and that such diversions routinely consumed 35% of the bandwidth there.

"I hated the JCPenney culture. It was pathetic," Kramer is quoted as saying in the article by Dana Mattioli.

JCPenney has stumbled badly since CEO Ron Johnson came to the company in 2011 after spearheading successful retailing innovations at Apple and Target Corp. Johnson's vision for JCPenney included eliminating the many sales and promotions that had been part and parcel of the retailer's operations, rethinking its merchandise and store layouts to emphasize boutique-like stores-within-stores, and a commitment to RFID technology that would allow the retailer to phase out traditional point-of-sale technology.

While the merchandising revamp has proceeded, Johnson has had to backtrack on both the changes in pricing policy and the scale of the RFID commitment. In the meanwhile, revenues, profits and same-store sales have plummeted during the first three quarters of fiscal 2012. During Q3, total sales decreased 26.6% compared to the same period the previous year, and comp store sales plummeted 26.1%. Even online sales, usually a bright spot for retailers, dropped 37.3%.

In fact, JCPenney had the dubious honor of making a 2013 "Do or Die" list compiled by the Wall Street Journal late last year, joining heavily challenged retailers Sears, Best Buy and RadioShack.

Other press reports have been even harsher. A headline from a February 22 Business Insider report sums up the prevailing mood: "Inside JCPenney: Widespread Fear, Anxiety, and Distrust of Ron Johnson and his New Management Team."

For related content: JCPenney: Year Two for the Turnaround

JCPenney Puts the Brakes on RFID Rollout

JCPenney, Best Buy, Sears on 'Do or Die' List for 2013

JCPenney's Turnaround is Years Away

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