JCP Stock Drops After Announcing Kansas Closure and 250 Layoffs

JCP stock

JCP stock is in the red today after JC Penney (NYSE:JCP) announced plans to close its customer service center in Kansas, eliminating almost 250 jobs following disappointing holiday sales.

JCP Stock Continues Poor Start to 2020

Last week, the struggling retailer reported a 7.5% decline in comparable same-store sales for the nine-week period ended January 4, traditionally the busiest time for retailers. As a result of the poor holiday performance, JCP stock dropped over 20% in January, and it looks as though the situation is only going from bad to worse for the Texas-based firm and its investors. The company made the announcement on Wednesday that it would close its customer service center in Lenexa, Kansas, at the expense of 243 jobs.

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“In order to centralize call center operations and deliver streamlined service to our customers, JCPenney will be closing the Lenexa call center,” said JC Penney spokeswoman Kristen Bennett. “The Lenexa supply chain facility is not affected by this action and will remain in operation.” Bennet added that other JC Penney businesses in the area, including a distribution center, will not be impacted. According to local sources, JC Penney is one of the largest employers in Lenexa after issuing a call to hire over 400 staff in 2018. Today’s announcement has sent JCP stock down 2%.

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Turnaround Effort Beginning to Slow?

Despite the disappointing holiday performance, management at JC Penney maintains that the company’s ongoing turnaround effort is yielding results, with JCP stock making some sizeable gains in the latter half of 2019 after a dismal few years. Extensive store revamps, ditching underperforming businesses, and narrower-than-expected losses led to JCP stock rocketing almost 180% between August and December.

The company has also maintained its financial outlook for fiscal 2019, expecting comparable same-store sales to fall between 7% and 8%. JC Penney can look to larger rival Target (NYSE:TGT) as an example of how a traditional brick-and-mortar retailer can turn its slumping performance around and continue to compete in the age of e-commerce. TGT stock had been bleeding from early 2017 due to much of the same issues JCP stock is facing, but now TGT stock trades near its highest-ever valuation largely to an expanded online presence.

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