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J. C. Penney Begins To Simplify Business Model - Quick Facts

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4/5/2012 11:29 AM ET

J. C. Penney Company Inc. (JCP: Quote) announced that it has begun to simplify its business model in order to align operations with the changes it is making to become America's favorite store.

The company said that its new approach to pricing, promotion, merchandising and the customer experience requires a more competitive operational structure, with fewer layers of management, wider spans of control and greater accountability throughout the organization.

The company said that it is reorganizing the workforce at its headquarters in Plano, Texas, where it will be taking a range of actions to realign its management structure.

J. C. Penney said that the business simplification announcement is part of its plan, announced on January 26, 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 company expects that the changes will reduce expenses to below 30 percent of sales by the end of 2013 and position the Company to achieve an expense run rate of 27 percent by the completion of its transformation in 2015.

The company also announced that it plans to close its customer call center in Pittsburgh, Pennsylvania.

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by RTT Staff Writer

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