J. C. Penney Company Inc. (JCP), a leading retailer of apparel and footwear, accessories, fashion jewelry, beauty products and home furnishings, announced the departure of its CFO, Michael Dastugue. Michael Kramer will be replacing him as the interim CFO of the company.
In a separate story, the company updated its transformation plan where it aims to simplify the operational structure, which will expectedly pave the way for positive earnings growth and boost shareholder’s value.
J. C. Penney has been busy transforming the way it operates. With its new pricing strategy, fresh logo, strategic merchandise initiatives, reduction in costs, enhancement of shopping experience and customers shopping at their own terms, the company is working hard to simplify its operational structure.
The idea is to augment sales and enhance productivity at stores, which in-turn will lead to margin expansion. The company aims to reduce costs by $900 million in the first couple of years of its transformation, resulting in lowering the expenses below 30% of sales. Moreover, the company targets expenses to be 27% of sales by the end of the transformation process.
Specifically, the company will abridge significant amount of costs from stores and advertising and from operations at its home office. Following the rationale, J. C. Penney announced the realignment of its management structure and restructuring of its workforce at its headquarters in Plano, Texas.
J. C. Penney is trying every means to tide over a distressed economy. The company entered into a strategic alliance with Martha Stewart Living Omnimedia Inc. (MSO) to uplift itself. It is betting hard on Martha Stewart to be a fortune changer.
In October, J. C. Penney entered into an asset buyout agreement with Liz Claiborne Inc. (:LIZ). Per the deal, J. C. Penney acquired the global rights for the Liz Claiborne portfolio of brands and the U.S. and Puerto Rico rights for Monet, a fashion jewelry brand, for $267.5 million.
These moves are expected to increase sales and improve traffic for the company. We remain optimistic and believe that these measures will definitely pave the way for continued growth and innovation.
Currently, J. C. Penney retains a Zacks #3 Rank, which translates into a short-term Hold rating. Moreover, considering the company’s fundamentals, we have a long-term Neutral recommendation.
More From Zacks.com