J.C. Penney Company Incorporated (NYSE: JCP), which reported fiscal first-quarter net losses of $163 million, said Tuesday it would discontinue its 20 cent per share quarterly dividend to help fund its restructuring. Shares plunged on the news.

The Plano, Texas-based company has been restructuring and incurred $76 million in expenses related to the effort during the three months ended April 28. To help offset the losses from restructuring, the company announced it would discontinue its 20 cent per share quarterly dividend for an annual savings of $175 million.

We have dramatically simplified our business model and reorganized our teams at headquarters and in our stores, CEO Ron Johnson said, adding that the company still has its work cut out for it to drive more traffic to its stores. Sales and profitability have been tougher than anticipated. 

The restructuring expenses compounded the net effect of a 20.1 percent drop in sales during the quarter. Store sales fell 18.9 percent, while online sales plummeted 27.9 percent. On an adjusted basis, JC Penney reported a net loss of $163 million for the fiscal quarter.

Earlier in the day Fitch Solutions reported that JC Penney Credit Default Swaps margins had widened to 35 percent over the past quarter, compared to an average of 7 percent for North American retailers.

Credit protection on JC Penney is pricing at its highest level in over three years, Fitch Solutions director Diana Allmendinger said.

J.C. Penney Company Incorporated (NYSE: JCP) shares fell $3.54, or 10.65 percent, to $29.82 in aftermarket trading.