J. C. Penney to Move Headquarters From New York to Dallas
J. C. Penney said Tuesday that it will move its corporate headquarters and about 3,800 employees to a new headquarters in Dallas next spring in an effort to cut operating costs and cash in on the big retailer’s valuable Manhattan real estate.
The announcement came less than a week after Mobil announced that it will move its New York headquarters to a Virginia suburb of Washington and a month after the disclosure that American Telephone & Telegraph may move more of its staff from New York to New Jersey.
But New York officials were quick to try to distinguish these departures from the corporate exodus of the late 1960s and 1970s. They said these moves were prompted by the rapid run-up in the value of Manhattan real estate and financial strains on these companies, rather than a loss of faith in the city.
In a prepared statement, Penney Chairman William R. Howell said the $140-million cost of the move will be offset within a few years by reduced labor and occupancy costs, as well as savings on travel and taxes. The company will also gain efficiency in being in the center of its nationwide chain of department stores, he said.
The company expects the move to cut administrative costs by more than $60 million a year.
Penney, the third-largest general merchandise retailer, saw a sharp profit rise last year but has struggled with sluggish earnings growth through most of the 1980s. The company was founded in New York in 1914, and has occupied its 1.5-million-square-foot headquarters on Sixth Avenue since 1964.
The company plans to retain ownership of the building and lease its space as employees move out.
Mobil announced last Friday that it would move its 1,900-person headquarters staff to Fairfax, Va., to cut costs and spare its employees the expense and other discomfort of New York life. AT&T;'s plan prompted Mayor Edward I. Koch to say he would “sue the hell out of them” to recover tax breaks the company had won in special negotiations with the city.
AT&T; officials have since said that they are still considering whether to lease the space.
City officials stressed that New York continues to gain private-sector jobs and that companies--notably financial firms--continue to move into Manhattan as others move out.
The city’s unemployment rate is currently 5.8%, the lowest it has been in 13 years, a spokesman said. And while New York lost 600,000 jobs between the 1969 and 1977, it has gained 300,000 since then, he said.