JC Penney CEO Johnson may be running out of time

After a disastrous holiday quarter, the board is now said to be considering either firing the embattled boss or selling the company.

By Aimee Picchi Mar 6, 2013 1:28PM

JCPenney CEO Ron Johnson.A lot has changed since J.C. Penney (JCP) Chief Executive Ron Johnson secured his job in 2011 with the fervid support of hedge-fund manager Bill Ackman. 


For starters, Johnson has lost Ackman -- and many other Penney shareholders -- a lot of money. He has also alienated much of Penney's core customer base by eliminating coupons and sales, bringing the more than 100-year-old retailer to a precarious position.


Now, Penney's board is losing patience with Johnson's leadership and is considering either selling Penney or replacing Johnson, if it can't reverse a steep decline in sales within the year, according to The Wall Street Journal


The 11-person board includes Ackman -- the retailer's largest shareholder, who championed Johnson's appointment Ackman also once called Johnson "the Steve Jobs of the retail industry," referring to Apple's (AAPL) late co-founder. Johnson previously ran Apple's retail operations and is credited with pioneering the highly successful Apple Stores. 


As recently as January, Ackman was coming out in support of Johnson, telling CNBC that the company would "make progress" under his leadership. "If three years from now, Ron Johnson is still struggling to turn around JC Penney, he's probably the wrong guy," Ackman said.


That three-year window has been shortened to only a year, after the shares plunged 24% this year through Tuesday. The stock took a dive last week after the company reported a horrendous holiday quarter.


One board member has expressed his displeasure with the massive sell-off: Steven Roth, chairman of Vornado Realty Trust (VNO), once the retailer's second-biggest shareholder. Vornado on Monday sold off almost half its stake in Penney, according to Bloomberg Businessweek


The board, which includes Johnson, will closely track sales and merchandising over the next six months. If sales continue to suffer, the board will consider replacing Johnson or even selling the retailer, the Journal notes. 


While Johnson was brought in to fix Penney, he has left it in more desperate shape than he found it. As MSN moneyNOW detailed on Thursday, the CEO has made a series of strategic missteps, including a legal mess with Macy's that could leave Penney's home-good shelves bare and failing to test the much-reviled no-discounts strategy before implementing it. 


More on moneyNOW

54Comments
Mar 6, 2013 3:12PM
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Time for this CEO to go bye bye without  bonus package.  He has basically destroyed the business with his stupid ideas.  Bye, Bye.
Mar 6, 2013 1:36PM
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Bring back more variety,bring back sales and get a new CEO that knows clothing and home decor trends!  Get some famous people on board !  Get creative and stop catering to just the youth !  There is no reason that Jcpenney can't compete.  Get the buyers on board with a Made in America slogan! There are so many options....if kohls can do it so can JCPenney...now get to work and change things up!   
Mar 6, 2013 3:20PM
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why dont they actually ask their CUSTOMERS why we are no longer shopping at JCP...I shopped there loyally for years. Suddenly, they have no variety, maybe 3 brands of jeans, nothing to choose from anymore. prices are inflated, shelves & racks are empty.  This store has declined steadily in choice & value for the past 2 years.
Mar 6, 2013 3:15PM
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JCP was once one of my favorite stores.  I just don't shop there anymore, and that started when Ron Johnson starting making changes. 
Mar 6, 2013 2:47PM
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I totally agree with Joshua Tree.  The problem is not the store; the problem is the idiot CEO.  he knew NOTHING about retail clothing, nor did he survey his consumer base to find out what the customers wanted.  Mr. Johnson...THAT'S where the money is and if you're going to succeed, you have to follow the money, or the money goes elsewhere.  There is absolutely no reason JCP can't compete; it just needs a complete overhaul by someone who knows what the consumer wants and how to give it to them, or at least market in such a way that they will want to come in and check things out.  JCP was a wonderful store for the working class person to go and find nice things at affordable prices that looked decent.  This moron has taken that shopping experience and turned it into a dung heap.  What kills me is that the shareholders are willing to put up with this for 6 months.  What makes them think that if this idiot hasn't improved things in the LAST 6 months that he's going to improve them in the NEXT 6 months??? Get rid of the problem while the hole can still be plugged--or maybe that's what they want.  Sell it off, Johnson gets his big exit salary+bonus, the shareholders get their big payout and no longer have to worry about anything.  Just like everything else in America today, it's all about greed and the consumer is suffering.
Mar 6, 2013 3:36PM
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So the CEO MIGHT get fired ? The worst part of the story about this is all the employees who lost their jobs due to store closings who made low wages.  It's always the employees at the bottom who make the least who has to take the back end of management's stupid decisions.

 

The company should have gotten rid of Johnson yesterday. I don't work for JC Penney, but I feel bad for all the employees who had to become unemployed due to his decision making.

Mar 6, 2013 2:25PM
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I always loved JCP! Especially their towels. Variety seems to be key...and lacking. The store seems empty when I go in, yet I have lost interest in shopping there due to boredom.
Mar 6, 2013 3:41PM
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I used to buy all my clothing at Jc Penny. But they cut back on selection and variety and most importantly, people. Now they just remind me of K-mart. Poor quality merchandise and no customer service!. I am now shopping at Macy's for all of my suits, etc.. The board needs to ax this CEO before it's too late!
Mar 6, 2013 3:52PM
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Fire the CEO and all those idiots he hired. While JCP is sinking like the Titanic these new people fly private jets and stay at the Ritz in Dallas on company money. Bring back the old JCP !!!
Mar 6, 2013 3:34PM
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He, Mr. Johnson, has ruined JC Penneys. 

 

Mar 6, 2013 4:20PM
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Seriously - what is taking so long to fire this guy????  He has ruined JCP.  I don't shop there anymore.  Bare shelves, hard to find anything, pricing is not good, quality doesn't even look good.  Get rid of this guy!!!!
Mar 6, 2013 4:08PM
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They need to fire the CEO and dont give him any pay for doing a bad job. and go back to what they were doing before.  This CEO is a idiot, JC Penney dont give this man a dime.
Mar 6, 2013 4:21PM
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Bring back sales and coupons!! I LOVED walking in to shop with a $10 or $15 coupon in my hand, I always left feeling like I got a bargain, Now the prices are inflated and even the "best Buy" items are high priced. Used to shop there all the time, now I see no reason as I can go to Kohls and get better quality and use a discount coupon, sometimes as much aas 30% off.
Mar 6, 2013 4:38PM
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The CEO should go, that is a no brainer!.  Every employee he made retire, and all the employees who lost their positions because of the elimination of the catalog departments should be offered their jobs back.  Internet sales are down almost 40% (or so it is reported).  There were many experienced employees who could have helped with the transition if he had let them.  I suppose that he had to paid for his corporate jet trips and living at the $3,000 dollar a night hotel room some way.
Mar 6, 2013 4:28PM
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I thought it was a dumb idea to name the store JCP from J.C. Penney. 
Mar 6, 2013 4:38PM
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Don't sell JcPenney.  Put Ron Johnson out on the street.  Just because he could run the retail store Apple does not mean he could sell clothes & stuff.  He is not good for JCP and he needs to be let go IMMEDIATELY.  Since he took over, the clothes are not made of the quality they once were.

I used to love JCP but now I am thinking twice before buying from there.  It is really sad

Mar 6, 2013 3:56PM
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JC Penney is very easily fixed by simply asking customers what they want rather than trying to tell them what they want.  At Apple, they are innovating--what they are providing is new.  When a product is new--yes, you can convince people that  they need it. But, clothing is not new. The customers who are willing to be talked into products that are "new" are not shopping at JC Penney, and they never will--they already have their favorite designers, and those designers aren't going to sell at JC Penney. It was an interesting idea--to try and bring the cutting-edge designers to JC Penney--but they don't want to be there.

 

JC Penney had a good business model--provide standard items (camp shirts of the same type and quality, but in the current color trend; bath towels by good manufacturers; store brands that mimicked, in quite good quality, things like Dockers)--at a good price to those who will pay full price, and then mark the products down as the inventory dwindles. They started having trouble not because of that business model, but because they didn't have things in stock when people wanted them.

 

The best thing for JC Penney at the moment would be to shift their online store back to the old model--have standard items that basically do not change in anything other than colors (to reflect the trends), have those standard items at a good price initial price before a season, and mark the price down as the stock dwindles a bit because the season is ending or the colors are going out of fashion, and then order new stock as a new season is about to begin.  If they want to make the on-ground stores into "boutique" stores, that's fine. But the on-ground stores should have kiosk areas for those who want to order the more standard items--with staff to help people with the kiosks.

 

This is not a hard fix--that they won't do it shows how little the current CEO is working and how much he cares.  He's getting good money and apparently intends to retire after this job and/or start his own business. He's not actually trying to do anything for JC Penney, and it shows.

Mar 6, 2013 3:33PM
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if Penny's brings in Martha stewart I am done shopping there.  Martha Stewart is cheap - cheap - cheap yet expensive. 

Mar 6, 2013 4:51PM
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How can the board sit by this? If anyone of us consumers did this poorly at our jobs to the point that the owner considered selling the company we would be fired long before that would even be a Plan B. Like most of the commenters I used to be a valued and loyal customer for 40+ years. Now it is unrecognizable, the lack of variety and merchandise is abhorable. Their every day low pricing is not. You can catch the item you need by the same design on sale at Kohl's, Macy's and Sears (yes that prepetually down, store). Their need to cut so many jobs, is because they are running out of money, keep the customer service in the stores, buy some merchandise that will sell and run an ad with "Door Busters" and a "top this Macy's pricing" and "kiss my *** Kohl's" marketing. Or how about a "we were wrong ad" to the customers, we so regret losing your valued business and are listening. We have made some mistakes along the way but promise you greater selection, marketing, and service all of which were and are Penney's core values from the beginning. JCP corporate office lets talk...
Mar 6, 2013 3:53PM
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Follow Kohls model. lol    Shoppers want to identify with a brand and want high fashion/luxe brand for minimal cost.  Mango is a great line, but it's costly in comparison to Vera Wang, who's a well known designer.

 

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