JC Penney 'Valentine's Day Massacre' coming?

Insiders are reportedly worried about rumors that the retailer's CEO will lay off hundreds at the corporate offices this month.

By Kim Peterson Feb 6, 2013 3:38PM
Customer Service counter at the J.C. Penney store in Westminster, Colorado on February 20, 2009 ( RICK WILKING/Newscom/RTR)J.C. Penney (JCP) insiders are worried about upcoming layoffs this month, calling it a "Valentine's Day Massacre," The New York Post reports.

There are rumors that CEO Ron Johnson may lay off at least 10% of the 3,000 employees working at the company's headquarters in Plano, Texas.

Johnson may have been itching to do this for a while but may have wanted to wait until the company's new fiscal year began, the Post reports. That's because laying people off costs money -- in severance pay, for example -- and Johnson didn't want to load up the previous fiscal year with even more expenses.

Sources tell the newspaper the company is running low on cash. And its third-quarter earnings report confirms it, showing that at the end of October J.C. Penney had $525 million in cash -- down from $1.1 billion a year earlier.

Johnson was asked about the rumors Wednesday on CNBC and didn't give a definitive answer. Here's what he said, according to The Dallas Morning News:
"No, no. There are a lot of rumors. We have a rumor a day, it seems like. Today it's about layoffs at our headquarters. I would never talk about that, but you've got to separate the facts from the rumors. Ultimately, we need to have the right cost structure for the business and we have to grow. And we're going to be sure we do those two things."
Johnson has been busy bringing in outside brands to stores, including Martha Stewart and Joe Fresh. Something has to give when you're making that kind of pricey investment, and the Post reports that the ax will likely fall on the designers and other employees who develop Penney's private-label brands.

Already, the Post reports, private brands like St. John's Bay and Arizona are starting to disappear from stores.

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Tags: Retail
337Comments
Feb 6, 2013 6:29PM
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Got a paid charge card for Christmas. Went to the new jcp and looked hard for articles I would buy. The old Penney's would always have something for seniors and I could be assured of leaving with something wearable. The brands I would purchase were still there but the styling was aimed younger adults. After spending an hour looking for something I decided to see if I could get a refund and was told by a manager in not so friendly voice where to go. I ended up throwing the damn card at her and told her to spend it.
Feb 6, 2013 6:25PM
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JCp what are you doing? you`ve gotten rid of what i use to shop their for..Also bring back your catologs

Furniture etc.  I use to buy almost every thing there. Now i can`t find anything worth shopping there for.

Get rid of your ceo and hire someone who knows what their doing..What are you part of Bain Capital?

Get rid of customers and close the stores and put money in the ceos pocket..so very sad..

Feb 6, 2013 6:23PM
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shareholder greed is running the company, milk more profit with less people, less variety. That's happening to a lot of companies now. The shareholders tell the company how to run the business even though they have no experience running a company, they want to tell the company how to run. The way to a successful business is the customers always right, because they are the ones spending their money. Shareholders need to stay out of business dealings unless there is gross negligence on the ceo's part. I call the new breed of shareholders leeches, because they just want to suck the blood dry out of a company in search of more and more profit. How much is enough, People?

Feb 6, 2013 6:22PM
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J.C. Penney's is in the same trap that most American retailers have put themselves into (or, will soon realize).    Since they chose to stock their shelves with exclusively foreign-made goods (China, India) - essentially supporting the Outsourcing of American manufacturing jobs -  Americans now have LESS MONEY to spend.   Accordingly,  Americans ONLY BUY from J.C. Penney's, when they throw a Killer Sale, and mark things down 50% or 60%.    That's how it goes.

 

Penney's (and most other American retailers) pursued the Siren Song of huge short-term gains in their bottom line....at the expense of having ANY FUTURE AT ALL.    The chickens are only now coming home to roost,  and it will be MUCH WORSE, over the next few years.    I see a lot of people walking around,  looking like they bought their clothes at the Thrift Shop - and many probably did.    That might be depressing for some,   but it is LETHAL for Retailers.   OH, WELL.

Feb 6, 2013 6:20PM
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This Johnson guy should be fired.  His comment that things will change when he gets rid of all the "great aunts" clothes was terrible.  Who does he think supported the store...it certainly wasn't the teenagers.  He got rid of Alfred Dunner and now St. John Bay.  I am so done with Penney's. 

Feb 6, 2013 6:18PM
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Getting rid of St. John's Bay and Arizona are a huge mistake.  Have worn both product lines, and St. John's Bay is an exceptionally good product; you'll be hard-pressed to find a better value in heavyweight or denim shirts. 

 

JCP needs to get rid of this management team and bring in some people who understand what St. John's Bay and Arizona are.  Only way I can see to make St. John's Bay better is to put someone in charge of that line who understands outdoor and tactical apparel.  Add a true outdoor/tactical edge to that product line and you have a run-away winner.

 

Martha Stewart makes no sense at all.  It's a Sears/Kmart brand that doesn't compel anyone to buy it.  No better way to sink your own stores than to fill them with competitors' brands that have no chance of selling in your store.  Considering you have an Apple guy running this company, this would be like sticking Palm Pilots in an Apple store.

 

The cash-burn rate here is astonishing.  They've burned through 50% of their cash in one year.  They will be lucky to make it to the end of this year; if they do, they're done first quarter of next year.  I've said that their new store idea would take three to five years to work, and that they're lucky to have five quarters left.  The cash burn rate does not lie, and is going to accelerate through this year. 

 

Been around retail over twenty years doing outside contract financial-related work, and have been in JCP stores in that capacity.  If you spend an entire day in one of their stores, and know how to look around, you would come to the very reasonable conclusion that JCP is a Chapter 7 waiting for a time and place to happen.

Feb 6, 2013 6:18PM
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"There are rumors that CEO Ron Johnson may lay off at least 10% of the 3,000 employees working at the company's headquarters in Plano, Texas."

The first guy they ought to lay off is Ron Johnson. He is the developer of this mess and caused most of it.
Feb 6, 2013 6:09PM
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Just get a new CEO and they'll be ok.  That isn't rocket science !
Feb 6, 2013 6:07PM
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Unfortunately the one who should be laid off  and the one responsible for taking the company to near  bankruptcy, is the same person who took  millions from JC Penny's in obscene compensation ( 60 million the first two months in office) and that is the new CEO ( I believe the jerks name is Johnson). Of course he'll continue until there is virtually nothing left.
Feb 6, 2013 5:55PM
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10% ha!  That is like rearranging the deck chairs on the Titanic.   I'll be the good residents of Plano would love to run Johnson and Degemerate out of town on the next stage.  Stick a fork in them, they are done.    No cash after August.
Feb 6, 2013 5:50PM
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Love JC Penny.....please stay in business......
Feb 6, 2013 5:50PM
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Makers no sense to get rid of brands like st john's and arizona who have made them money for years.To bring in martha steward and joe fresh who they not only pay big upfront money to but also a percentage on the backend.martha steward did nothing for k-mart but cause them to lose money.WHO really gives a whoot about wanna be designers like steward and fresh there flash in the pan,stick with stuff that sells.PLUS put people on the FLOOR to up sell stuff it's a FACT people will spend more money IF there are sales people on the floor to help them.
Feb 6, 2013 5:48PM
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Went to their website to look for men's jeans. Some were $60 to $80 a pair (msrp) . Like I'm really going to buy a pair of work jeans for that price?!!!  I could rent a tux for less. 
Feb 6, 2013 5:44PM
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Why in the world would you get rid of St. John's Bay??? What are they going to replace it with? Hipster outfits for the 18-25 bi-sexual demographic? I can't figure out how this Johnson has stayed on ; He certainly hasn't demonstrated a Midas touch now,  has he?
Feb 6, 2013 5:42PM
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Sears will down size more first, then JCP will close its doors and then K-mart any bets on  that???

 

That will be before the end of the year

Feb 6, 2013 5:37PM
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What JCP is doing may be a "massacre" to their corporate employees, but the company itself is commiting a slow suicide and has been for a while. I've shopped there for at least 20 years and find myself buying less and less there. I don't know who does their buying, but all of my favorite brands are either going or already gone - SJB, Arizona, Cabin Creek, and have been replaced by no-name, no quality clothing.  I've heard that they're doing away with their catalog which would explain why every time I try to order something online it's "out of stock".  All of this is forcing me to shop elsewhere.
Feb 6, 2013 5:29PM
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St. John's Bay has been reliable clothing line for some time now, never cared for the fit or fabric of most Arizona.  (for my sons).  However, that being said, if I go to Belk, Macy, Dillard, and even Target there are similar brands there, similarly priced and the customer service is great. 
Feb 6, 2013 5:26PM
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The members of the Board at JCP have plundered the assests for their own gain.  They are, and have been over compensated for decades.  No wonder on one wants the stock.  The money goes into the pockets of the Board members and the Board members appoint Manaagement to ensure the process goes on and on and on and on.

 

The JCP brand doesn't represent families anymore.  It's all about catering to every group except working families with kids in school.  I find more value at the local thrift store.

Feb 6, 2013 5:26PM
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I was looking for St John's bay the other day - loved their shirts - reasonable quality and MUCH cheaper than Tommy Bahama's - nothing similar in the stores - guess i will be heading to Kohls.

Ron may be the only persaon left there to turn out the lights - they missed their chance right before Christmas to admit their mistake and pick up on the Christmas season sales - Spring time is already here and back-to-school is too far away - the stores will be empty by then as the mfg's start to rethink their committment because Ron can't guaranty enough traffic in the stores to justify the expense to the mfg of paying for their portion of the store-within-a-store. Prices aren't competitive and no one is there to make that impluse buy when they are "sale" shopping. I still contend the only positive thing to come out of this will be a business school case study of how not to run a major box retailer. Ron doesn' really care other than his pride - he's got his $50MM now and that will go a long way to supplement his unemployment - Ackman controls the strings and as long he is stupid enough to buy into Ron's BS and he can short sell and still have his investment covered he doesn't give a rats **** what happens - wait another 2 weeks when the earnings report comes out LATE - not enough cash on the balance sheet to keep funding the transistion and not enough cash flow - creditors are tightening the reins - will be hard to get merchandise when mfg think you might file - tick tock tick tock

Feb 6, 2013 5:23PM
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According to MSN Money the laid off workers from J.C. Penney need to run and apply at Home Depot.
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