J.C. Penney cuts $900 million from annual expenses

J.C. Penney is aiming to cut $900 million from annual expenses by 2013. The retailer has seen its sales slip from $19.8 billion in 2008 to $17.2 billion last year. IN order to reach this goal, the fashion chain will cut down its corporate

structure by laying off 900 workers.

 “We J.C. Penney cuts $900 million from annual expensesare going to operate like a start-up,” new CEO Ron Johnson said in a statement released last THursday. “In our case, this has involved some very difficult decisions that have had an impact on many of our associates, but these changes are essential to help us achieve our long-term goals and, ultimately, grow our associate base as we grow our business.”

The 110-year-old business will reduce its headquarters staff by 600 and shutter a Pittsburgh call center in July, trimming another 300 jobs. The call center experienced a 30% fall in volume complaints in past months, thanks to the retailer’s simplified price structure, J.C. Penney spokeswoman Rebecca Winter said in an email to ‘Forbes’.

According to Associated Press, the company had said then it was targeting $900 million in expense cuts to be completed over the first two years of its transformation. That included $200 million in savings from its corporate headquarters as well as $400 million in cost savings in store operations and $300 million in advertising savings. The changes are expected to reduce expenses below 30 percent of sales by the end of 2013.

Besides, J.C. Penney changed drastically its price scheme and would redesign its locations into small departments clustered around a central location called The Store.

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