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PLANO, Texas — J.C. Penney Co. has dismissed chief executive officer Ron Johnson and appointed his predecessor, Myron Ullman, as his replacement.
J.C. Penney Co. has dismissed chief executive officer Ron Johnson and appointed his predecessor, Myron Ullman, as his replacement.
The move by Penney’s board of directors followed by about five weeks the company’s report of catastrophic results for fiscal 2012. The department store chain’s top line plunged 24.8% to $12.99 billion, while its net loss ballooned to $985 million from red ink totaling $152 million in fiscal 2011. Comparable-store sales for the year plummeted 25.2%, as customer traffic fell 13%.
Johnson’s firing brought to an end a tumultuous 17-month tenure that saw the CEO attempt unsuccessfully to wean Penney’s shoppers from the sales and promotions to which they were accustomed in favor of an everyday-low price (EDLP) strategy. The changes were rolled out chainwide without the normal practice of a limited test.
By January, after three consecutive quarters of deepening same-store sales declines, Johnson was ready to concede and announced that the retailer would resume offering sales during the holidays and other key shopping periods.
When the company reported a much-larger-than-expected fourth quarter loss of $552 million and a 31.7% drop in same-store sales, he completed the retreat from EDLP, announcing that Penney would resume weekly sales. "Experience is making mistakes and learning from them, and I have learned a lot," Johnson told analysts during Penney’s fourth quarter conference call. "I had a personal conviction to deliver everyday value beginning with truth on the price tag.
"We worked really hard and tried many things to help the customer understand that she could shop anytime on her terms. But we learned that she prefers a sale and sometimes loves a coupon."
Less questionable was the decision to reconfigure Penney’s stores into numerous branded, on-trend boutiques featuring such names as Levi’s, Izod, Liz Claiborne and, most recently, the Joe Fresh brand originally launched by Canada’s Loblaw Cos. Early results from those initiatives reportedly have been strong.
The return of Ullman to the helm was greeted with clear disappointment by Wall Street, with some analysts suggesting that shareholders should vote out the current board members at the next annual meeting. Ullman came in for blame for creating the problems that Johnson attempted to fix. The retailer’s share price lost 15% of its value during Ullman’s tenure from 2004 to 2011, then plunged 50% under Johnson.
