Penney to cut 2,000 jobs, close two Atlanta facilities

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Posted 1:23PM on Friday, January 10, 2003

PLANO, TEXAS - J.C. Penney Co. said Friday that it will cut about 2,000 jobs and close three facilities in its catalog business, whose sales have fallen sharply over the past year. Penney said it would close a catalog-fulfillment center in Atlanta and telemarketing centers in Atlanta and Lenexa, Kan., by the end of the second quarter. A Penney spokesman said about 800 jobs at the Atlanta fulfillment center were mostly full-time and most of the roughly 700 jobs at the two call centers were part-time. The remaining job cuts would be spread across four other fulfillment centers and 10 call centers, he said. Penney said it has about 250,000 employees. Sales at Penney's department stores were better than expected in December, as sales at stores open at least a year rose 4.7 percent from a year earlier. But the catalog division continued to slump, with sales dropping 23.7 percent from a year earlier. The company has reduced the size of its Big Book catalog and junked several unprofitable specialty catalogs. The restructuring of the catalog business will result in pretax charges of about $40 million, or 10 cents per share, in the first half of this year, the company said. The charges might be partially offset by related real-estate sales, it said. Penney said the moves would save about $30 million, or 37 cents per share, annually beginning in 2004. Friday's moves were the latest in a series of cutbacks in the catalog division. By the end of summer, Penney will have closed 17 outlet stores and four telemarketing centers since January 2000. Chairman and chief executive Allen Questrom, hired in September 2001, said the catalog division has improved its contribution to Penney's profits by eliminating unprofitable sales and cutting costs. Questrom said cutbacks in the catalog unit, combined with rising sales on the company's Web site, will further improve profits and cash flow. Penney operates about 1,060 department stores and 2,600 Eckerd drug stores. In midday trading Friday on the New York Stock Exchange, Penney shares fell $1.10, or 4.5 percent, to $23.48.