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J.C. Penny Begins Business Revamp Process - Update

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J. C. Penney Co. Inc. (JCP: Quote) said Thursday it has started the simplification process of its business, in line with a revamp plan revealed last January that would enable it better compete with rivals.

As a first step, J.C. Penney is reorganizing the workforce at its headquarters in Plano, Texas, with plans to close its customer call center in Pittsburgh, Pennsylvania.

The company will adopt a new approach to pricing, promotion, merchandising, blended with a management structure that has fewer layers, wider control and more accountability.

J. C. Penny CEO Ron Johnson said the company will henceforth work like a start up and will adopt a management style based on leadership.

"We are going to operate like a start-up. We are going to extend the reach and span of control of our very best talent...," Johnson said.

Last January, J.C. Penney revealed plans to cut annual costs by $900 million by 2013. The company plans to cut costs to below 30 percent of sales by 2013 and enable an expense run rate of 27 percent by 2015.

Johnson had revealed that store experience will be enhanced by including Main Street - the entire store merchandised in a series of 80 to 100 brand shops. J. C. Penney expects to feature 30 new and transformed brands by the fall of 2012. It will also sport a new logo.

Johnson took over as CEO of J. C. Penny in mid-June 2011 at a time when the company was struggling along with long-time rival Sears Holdings Inc. (SHLD) that has planned the sale of a number of unviable stores.

J.C. Penney in February reported a quarterly loss of $87 million or $0.41 per share, compared to net income of $271 million or $1.13 per share last year. Sales for the quarter slid 4.9 percent to $5.43 billion from last year.

JCP is trading on the NYSE at $35.20, down $0.26 or 0.73%, on a volume of 1.6 million shares.

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by RTT Staff Writer

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