Exterior of J.C. Penney store.

J.C. Penney Company Inc.’s stock is falling by over 6 percent to $8.34 in early trading after reports that the department store is facing an expense challenge.

Store managers were reportedly given a memo at the end of the first quarter that told them to take emergency measures. J.C. Penney has not commented on the report of the memo.

“We have an expense challenge for the month of April and are asking all stores to do their fair share by closely monitoring all expenses,” the memo said, according to the report in The New York Post. The move was expected to save $8,000 per store.

Both full-time and part-time employees reportedly had their hours cut. For example, an employee that would normally work 25 hours was trimmed to 10 or 15 hours. Markdowns were banned and the use of corporate credit cards was cut.

A week ago, Barron’s ran a story that suggested J.C. Penney’s stock could double over the next three years, saying that the turnaround potential was promising. The Barron’s report said the company had made substantial progress but wasn’t on the radar of many investors.

J.C. Penney has given ambitious guidance to the investment community as it expands its successful Sephora shops. Wall Street has generally regarded chief executive officer Marvin Ellison as doing a good job given the condition of the company when he took over.

However, there is concern regarding the company’s debt levels. With net debt at $4 billion and a market capitalization of only $2.5 billion, the debt could become an issue. By comparison, Macy’s debt is $7.64 billion, but its market cap is $11.6 billion. Kohl’s has $4.7 billion in debt, but its market cap is $7.5 billion.

J.C. Penney is expected to report earnings May 13. The Capital IQ estimate is for a loss of 36 cents in earnings per share and revenues are estimated at $2.9 billion.

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