J.C. Penney Sends Mixed Signals: Revived Commissions, Employee Layoffs
J.C. Penney (NYSE:JCP) shares finished up 1.15 percent sitting at $7.01 at the end of trading in New York, Wednesday, just before the struggling retailer announced that it plans to close 33 stores and lay off about 2,000 employees in 2014. According to a press release highlighted by USA Today, Penney said after the close of the stock market mid-week, “These actions are expected to result in an annual cost savings of approximately $65 million, beginning in 2014.”
Also in the release, CEO Myron E. Ullman maintained that, “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 JC Penney for future success.” Penney’s announcement Wednesday wasn’t exactly surprising news for consumers or investors, considering the Plano, Texas-based retailer has already been suffering declining revenue for many consecutive quarters now; however, the timing of its news release that came on the same day that Penney confirmed the revival of its sales commissions for employees sufficiently confused investors.
According to Bloomberg, a J.C. Penney spokesperson confirmed in a phone interview Wednesday that starting next month, the retailer will start compensating more than 3,000 staff members for their sale closures, reversing former CEO Ron Johnson’s decision to terminate the practice during his reign over the retailer. The announcement led Penney shares to rise up to the close in New York, but that was before investors learned of the retailer’s store closures and layoffs.