Mass Layoffs Backfired in JCPenney Overhaul

Slashing headcount wasn't one of Ron Johnson's better ideas

By Rob Quinn,  Newser Staff

Posted Apr 15, 2013 3:42 AM CDT | Updated Apr 15, 2013 6:19 AM CDT

(Newser) – Of all the missteps that led to the plunge in sales at JCPenney and the exit of CEO Ron Johnson, the mass layoffs Johnson instigated may have been the most damaging, the Wall Street Journal reports. The firm's average 150,000 full- and part-time workers had been gutted to an all-time low of 116,000 when Johnson left. The layoffs included teams behind house brands such as St. John's Bay that Johnson disparaged; those teams may now be key to turning the company around.

Insiders say that JCPenney execs wanted to make the layoffs painlessly, but lacked the resources for face-to-face firings and ended up axing workers in groups of 100-plus in an auditorium at headquarters. Returning CEO Myron Ullman now has to deal with low morale in addition to the firm's other woes and the hugely reduced headcount is complicating efforts to turn things around. The chain has launched a sweeping repricing of its goods—but even the in-house print shop that would once have produced signs to announce the changes was axed by Johnson, along with its 100 or so workers.

JCPenney is hoping its former CEO can revive the retailer after a risky turnaround strategy backfired and led to massive losses and steep sales declines.
JCPenney is hoping its former CEO can revive the retailer after a risky turnaround strategy backfired and led to massive losses and steep sales declines.   (AP Photo/Mark Lennihan)
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