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New York -- The ax has fallen at J.C. Penney Co. The company on Thursday laid off 600 workers from its corporate headquarters Plano, Texas, as its looks to streamline its business model amid a major reinvention of the business. The staff reduction, which equaled 13% to 14% of the headquarters staff, did not include any senior executives, according to The New York Times.
J.C. Penney said its new approach to pricing, promotion, merchandising and the customer experience requires a more competitive operational structure, with fewer layers of management. In a statement, CEO Ron Johnson said J.C. Penny was going to operate like a start-up.
“We are going to extend the reach and span of control of our very best talent,” he said. “We are going to be nimble, quick to learn, quicker to react and totally committed to realizing our vision to become America's favorite store. Often in business, companies must streamline in order to leap forward. 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 staff reduction is of J.C. Penney’s previously announced plan to reduce annual expenses by $900 million by the end of 2013. This includes $200 million in savings from its corporate headquarters, as well as $400 million in cost savings in store operations and $300 million in advertising expense savings. The changes are expected to reduce expenses to below 30% of sales by the end of 2013.
In addition, the retailer said it will close its customer call center in Pittsburgh, on July 1. The move will eliminate 300 jobs.