NO LOVE AT J.C. PENNEY

Am I Next? J.C. Penney Layoffs

It should be no surprise that J.C. Penny, a retailer who is closing 138 stores,  would also adjust their warehousing, logistics chain, and customer service call center by closing their Wauwatosa, Wisconsin facility with a loss of 670 workers.  It is also no surprise that the 2-million square feet facility would morph into a real estate play and sold to a private developer or possibly to the municipality to develop. 

Also it would be expected for a company spokesman to mouth the obligatory words, in this case Carter English who was quoted as saying ““It’s never easy taking actions that directly impact our valued associates, however, we feel this is a necessary business decision. Eligible associates will receive separation benefits, including outplacement support and an on-site career training class.”

Considering the reduction in mall traffic, affecting other retailers like Sears, Macy’s. According to media sources over 9,000 stores were closed in 2017 – primarily driven by the pricing, convenience, and fast-delivery from mega-stores like Amazon and Walmart. In addition to the layoffs, the company is said to be offering a voluntary retirement program to about 6,000 employees across the company to avoid layoffs.
 

NO LOVE AT CONDUENT

Am I Next? Conduent Layoffs and Restructuring

Conduent, the Xerox spin-off of its Business Services division, has announced that it would be laying off 267 workers. Sarah Amoriell, Conduent’s human resources spokesperson claims that “the positions are being permanently eliminated due to a change in business conditions.” Most of the positions involve customer-facing representatives known as “customer care assistants.”

Conduent mainly provides outsourced back offices that manages transaction-intensive processing like digital payments, claims processing, benefit administration, automated tolling along with analytics, and automation of other functions to both government and commercial customers. 

Unfortunately due to management and growth issues, many of Conduent’s systems were stand-alone platforms which were never integrated and managed as a single standardized entity. This opportunity provides for a fast turnaround and a much stronger company. 

Like him or not, this is the type of turnaround driven by activist investor Carl Icahn who has a major shareholder position in the company and three board seats. You can bet Icahn’s team is driving the divestiture of unprofitable operations,cost-cutting, and restructuring to reverse the effects of the mismanagement of previous contracts, reduced revenues, and abysmal margins. 

Conduent should not be confused with the other former Xerox company, now known as Fuji-Xerox, that offers document-based solutions and on-demand printing. 

NO LOVE AT PEPSICO

Am I Next? 1100 layoffs at Pepsico?

Pepsico announced that they will be laying off less than one-percent of their 110,000 employees or up to 1100 workers if you do the math.  This is said to be part of a part of a previously-announced and ongoing productivity program.  

Chairman and CEO  Indra Nooyi was quick to defend the Pepsico's 2017 reported results, saying, "These are impressive results, particularly in light of the challenges posed by global megatrends impacting our industry from macroeconomic and political volatility, to the continued rebalancing of the economic world, to shifting consumer preferences and increasing demand for healthier products, the disruption of retail costs by the rapid growth of e-commerce and the blurring of channel lines"  .

Pepsico posted a loss of $710 million in the three months ending Dec. 30, 2017 -- but was majorly impacted by the Trump tax reform which led to a $2.5 billion provisional net tax expense. Whether or not Pepsico chooses to repatriate future money from abroad and take advantage of lowered taxes remains to be seen. 

While the Trump tax proposal will result in a lower tax rate on U.S. earnings, it does impose a one-time mandatory tax on international accumulated earnings that existed at the end of 2017 -- regardless of whether or not an entity decides to repatriate those earnings from abroad.  

According to The Vice Chairman and CFO, "In the fourth quarter of 2017, we recorded a one-time $2.5 billion provisional net tax expense which reflects a portion of the total $4 billion liability on accumulated earnings which is expected to be paid out over eight years starting in 2019.