4 reasons JC Penney's Johnson could soon be out

The former Apple hotshot was once hailed as the department store's savior. After a series of missteps, his time is running out.

By Aimee Picchi Feb 28, 2013 3:53PM

File photo of Ron Johnson, CEO of JC Penney, in Dallas on Sept. 10, 2012 (© Brandon Wade/Invision for JCPenny /AP Images)J.C. Penney (JCP) Chief Executive Ron Johnson is certainly killing it, but not in the way that shareholders had hoped. 


The former Apple executive was brought in to revive the more than 100-year-old retail chain, but a series of missteps has left the department store in more desperate shape than when he found it. 


On Wednesday, the company reported a complete disaster of a holiday quarter, with more than half a billion dollars in losses over just three months. Sales during the period -- the most important one for retailers -- plunged 28.4% from a year earlier. The shares took a nosedive today, with the stock declining at one point by 22%, the biggest intraday drop since at least 1980, according to Bloomberg


While Johnson had predicted some rocky moments as he tried to refashion Penney, yesterday's bloodbath probably wasn't what he -- or shareholders -- had had in mind. Now, some investors and observers are speculating how much longer the would-be savior CEO will keep his job. 


Here are four missteps Johnson has made, which led to yesterday's terrible earnings report: 


Failing to test: When a colleague suggested to Johnson that the company test a new no-discounts strategy, he bristled, according to The Wall Street Journal. "We didn't test at Apple," Johnson reportedly said. By all accounts, the no-discounts strategy alienated many of the company's loyal customers. 


Expecting shoppers to act like Apple fans: Johnson, who created Apple's retail stores, got rid of coupons and sales, adopting a strategy of take-it-or-leave-it pricing on clothing. The problem? Penney shoppers aren't like Apple's fans, willing to pay a premium for the latest gadget. As the Harvard Business Review notes, Penney "sells fairly commoditized products."


Creating a legal mess with Macy's: Johnson lured domestic doyenne Martha Stewart into a deal to create a "store within a store" at Penney. The problem? She already had a deal with Macy's (M). Johnson's move has embroiled his company in a lawsuit from Macy's, with an embarrassing trial underway right now. 


Advertising disconnect: While some have lauded Johnson's fresh advertising approach, Penney's marketing has left some consumers confused. Its ads tout a fresh image, but as Mediapost points out, that doesn't "mesh with what's currently in the stores." 


More on moneyNOW

18Comments
Feb 28, 2013 5:37PM
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JC PENNEY has been ruined by this so-called know it all....I used to purchase quite a lot of nice looking clothes, shoes, purses, and etc....but no more....you are catering to the much younger generation and I don't and never will wear bright neon colored jeans, sweaters, etc....come on penney's,,,,bring the old one back....You will do much better in sales....and quit getting rid of some of your most loyal employees.....That's a shame!!!!   and SHAME on you JCP or like I still call it....JC PENNEY!!!!!
Feb 28, 2013 7:38PM
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Dump the Dude.   .No Severance either
Feb 28, 2013 8:30PM
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I honestly don't understand, Baby boomers are a vast portion of the market and have the money to make purchases...Why change an entire chain into a youth generated chain. I was in JCP recently and didn't find anything that I could wear in an office setting.  Some of the clothes are colorful, and thats fine...just don't make the entire JCP brand a neon youth shop.  Of course it's Mr Johnson's call...and mine not to return.  Good Luck JCP...or maybe RIP....Bad decisions!
Feb 28, 2013 4:53PM
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Used to shop there fairly often, and online.  Haven't been in or online in over a year or more.  My new card is still in the envelope they mailed to me in.  Kohl's around the corner, Macy's 10 miles away, other online options esp for men's shoes and jackets.  I never seen a JCP ad in the mail anymore, nothing to tempt me back into the store to just look around.  All I read is negative stuff...maybe I should make one trip to see for myself.  Also, not spending much money due to the economy and my diminishing needs.
Feb 28, 2013 7:55PM
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Why would you choose a techie to run an apparel and housewares store?

Apple consumer devices are a long way from department stores like JC Penney.

These kind of decisions are destroying this company.

Feb 28, 2013 11:16PM
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This guy has to go and have JCP get back to it's roots.  This whole new direction they've been pushed into sucks.  I used to shop here a lot.  Their catalog selection is horrible.  Their Big and Tall selection looks like it is being discontinued. Go back to your roots and your customers will be back!
Feb 28, 2013 8:01PM
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simply, he must go quickly.... let's give him a push!
Mar 1, 2013 3:25AM
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Dump this Douche - and do it quick before it is too late.

Feb 28, 2013 7:51PM
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cleanup and maintain dressing rooms.

I like a more conservative dressing style without too many neon colors.

Quality with profitable but fair pricing keeps you in business.

Instead of going after Martha Stewart find younger names to sponsor your products.

Kohl's sells a Marc Anthony line of clothes which I admire even though I am 62 years old.

Sales and coupon gimmicks work when done smartly.

Mar 1, 2013 10:08AM
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I have shopped JCP for 35 years.  It's always been my number 1.  In fact although Kohls is around the corner, I never shopped there cuz I found what fit me at JCP.  Now the store looks bare, There is hardly anything to even try on.  We are supposedly in the internet age of buying online.  I do shop online a lot but rarely for clothes.  I want to try them on and women LOVE to brouse.  It's so relaxing to get away and shop.  Now, I don't even go to JCP, I go immediately to KOHLs.  My allegiance has changed and yet I miss the good ole days, all the years of shopping at JCP.  It was a home away from home.  So sad to see it go.
Mar 1, 2013 8:08AM
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Replace the board of directors.  They allowed this mess to happen and continue to support this inept fool.
Mar 1, 2013 7:05AM
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I was really disappointed when Penny's ended its Catalog, A company that sold it's life on Catalog sales, Just like another big box store that was once a giant like Penny's was Sear's they two were a Catalog company but they are on the outs..Soon Penny's will be heading out to that same Pasture. What a shame hire these new whipper snappers come in an kill companies, they get outrageous bonus's & there all happy...So Long Penny's you'll be joining all the rest of the big box chains in history..that did away with there main Product the Catalog.
Mar 1, 2013 9:29AM
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Fire that egotistic stupid CEO Johnson.
He doesn't have a clue how to run a retail giant like Pennys.
Someone please post the phone number and email to Pennys so we can call and email and register our dislike of the way Johnson is ruining Pennys.
We were shopping at Pennys long before Johnson came along. We don't need or want him running the stores we shop at.


Mar 1, 2013 12:19PM
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I have shopped at Penneys for 50 years and even worked there after school. What a mess it has become. Now they are putting in the automated cashiers instead of having people to check you out.  I won't be shopping what little I do shop anymore.  Customer service cannot be replaced!!! I like the bright colors but I cannot shop for my husband anymore.  He works inside as well as outside but must look professional.  I always got the heavier, warm shirts made in different colors.  Now I can get them at Costco, thank goodness, as Penneys no longer carries them.  At least, I can now go into the store and come out with nothing.  There was a time when I always purchased something I couldn't live without!
Feb 28, 2013 8:16PM
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The clothing in the ads is horrible!  Anyone with a grain of sense has switched to thrift shops to find decent clothing to wear.  I stay away from anything that Ellen DeGeneres or her ilk promote. 
Feb 28, 2013 4:14PM
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http://b4psads.com.cs.pgssl.com/refer/?n=86&a=6255
Feb 28, 2013 6:05PM
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He created this nightmare. When he goes, I hope he takes Obama and his Liberal spend croneis with him.
Feb 28, 2013 4:54PM
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When he gets rid of Ellen Degnerate and leaves the homosexual reference in the dust we and many others may return and shop at Penneys.  Until then they can forget most of their previous shoppers.
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