JC Penney's CEO steps down

Ron Johnson was widely criticized for forcing too many ill-conceived changes on customers. Now, his predecessor is coming back to calm the waters.

By Kim Peterson Apr 8, 2013 5:44PM
File photo of Ron Johnson, CEO of JC Penney, in Dallas on Sept. 10, 2012 ( Brandon Wade/Invision for JCPenny /AP Images)The train wreck that was Ron Johnson's tenure at J.C. Penney (JCP) is over.

Johnson has stepped down from the top spot nearly 18 months after charging in with big plans to overhaul the retailer and its long-established business model.

His predecessor, Myron Ullman, is returning to lead the company. Investors initially applauded the move, sending shares up more than 12% in after-hours trading Monday. Later in the evening, shares fell back to an 8% loss.

Johnson's resignation brings to an end one of the more extraordinary business upheavals in recent memory. He made a name for himself leading the retail efforts of Apple (AAPL) and also held a top management position at Target (TGT). He was envisioned as a savior of sorts, and promised to return Penney to profit and make it a fashionable and exciting place to shop.

Johnson tried nixing sale events in favor of everyday low prices, and almost immediately found resistance from shoppers accustomed to Penney's couponing and discounting culture. He boldly revised the company's advertising, eschewing value propositions in favor of sparsely elegant and stylish displays that confused customers because they didn't show prices.

Investors watched in horror as Penney's stock price plummeted more than 50%.

Penney's board grew restless and perhaps rebellious at the end, cutting Johnson's 2012 pay by some 97% in a display of dissatisfaction. His cash salary was the same, but the cuts came from stock awards and bonuses. Johnson's final weeks as CEO were also marred by a costly legal battle with Macy's (M) over who had the right to sell Martha Stewart-branded products.

Recent regulatory filings show that Johnson was guaranteed a $150,000 payout if he resigned or was fired, Business Insider reports. Business Insider initially reported a $150 million payout, but issued a correction later.

It's unclear whether Johnson quit or was fired by the board. More details will likely emerge soon as Penney tries to move away from the Johnson era. But the questions that surrounded Penney when Johnson came on board are still there, and perhaps even sharper now. Can J.C. Penney survive? Can it appeal to its core customers, and attract new ones, without discounting itself into bankruptcy?

Observers reacted quickly to news of Johnson's departure on Twitter. "The key thing is this: $JCP is dead," wrote asset manager Jeff Macke. "I think it might be too great a job for anyone," wrote CNBC's Jim Cramer.

Others defended Johnson. Wall Street "is too impatient and doesn't understand how long it takes to turn around a business," wrote one. "He had a solid vision," wrote another Twitter user. "Sometimes it's too difficult to change a brand image though."


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347Comments
Apr 8, 2013 6:10PM
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SERIOUSLY?!? ... Recent regulatory filings show that he was guaranteed a $150 million payout if he resigned or was fired, Business Insider .  Now get rid of every piece of garbage sitting on the board who approved such nonsense.
Apr 8, 2013 6:03PM
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That's a start. Now, back to basics. Reanalyze the terminations of employees, stock the shelves with competitively priced merchandise and treat people as would have JC Penney himself. It still will take a lot to get me back but it is now possible with Johnson leaving!
Apr 8, 2013 6:37PM
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The way corporations hire  CEO's is baffling? Hundreds of millions in guarantees EVEN IF THEY FAIL? No where else will you see Failure so generously rewarded. The JCP/ Johnson fiasco  is a prime example. This guy has received over 200 million in compensation in less than 2 years and did nothing but destroy this old established retail icon. When you agree to contracts such as this one, there is virtually no accountability. Even the lowest hourly wage employee has a certain level of performance tied to their  pay at JCP right?  But not the CEO? How many dresses would JCP have to sell to break even on this guy?
Apr 8, 2013 6:03PM
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WILL THE CEOS AT JC PENNEY EVER LISTEN TO THE CORE SHOPPERS???
ROBERT
Apr 8, 2013 6:07PM
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A perfect example of somebody coming in to a company, thinking they know better, only listening to "yes" people and not listening to the customers and the associates.

This is true not only in retail (my occupation) but in the business world too.

Hope fully they get things turned around.

Apr 8, 2013 6:13PM
Apr 8, 2013 6:49PM
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Running the company into the ground gets you $150M...lmao The Board should be fired for making such a ridiculous contract. If I was a JCP shareholder I'd revolt and clean house.
Apr 8, 2013 6:31PM
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I think every member of the Board should have their pay cut or be forced to pay back to stockholders all the money paid in salary and bonuses to this guy. They kick out one ceo for another and then when it doesn't work out, they don't even look for someone else, they go back to the guy who they thought screwed up the company in the first place.
Apr 8, 2013 6:46PM
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About time, to bad so many loyal employees lost there jobs during his time to bad they didn't get a large check when they had to leave.

Apr 8, 2013 6:09PM
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Rarely Shop, you must have lost your mind. I am over 64 and go still to rock concerts, and mix audio myself. So I am not old hat as you say. I like Kohl's and Belk. I did like JCP until Ron Johnson. He laid off hundreds of workers, took a bonus of tens of millions in his first two months and nearly put the company out of business. As I just posted, it is a start to get me back with his ouster but it is not imminent only possible.
Apr 8, 2013 6:02PM
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Good riddance, I only wish more bad CEO's would be ousted and not paid a bundle when they leave. I wonder what kind of severance package JCP will be paying him. 
Apr 8, 2013 6:59PM
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This Johnson guy practically "single handedly" ruined J.C. Penney with his "wacked out" noveau Ideas!! Whoever the corporate executives were who ran the board with this guy, need to also be terminated immediately (Those who made the decision to hire him in the first place)!!

Many of my family and friends who grew up shopping at Penneys, have quit shopping there altogether, due mostly to all of the extreme changes...and it appeared as if Penneys was basically giving us all "the Bird" believing that they should cater to only the youth and waif teenagers (or the Likes), and could care less if all of the loyal older folks who had shopped there over the years, could just find someplace else to shop. We all spoke by spending our dollars elsewhere and obviously somebody started to notice. Hopefully J.C. Penneys will go back to some of it's former ways and re-establish with the communities and customers who made them what they formerly was...A Great Family place to shop!! 

Apr 8, 2013 6:25PM
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Well it is about time that they woke up and got rid of him. You don't test market Penney customers in New York when most of the customers are in the Mid-west. I have a large family and gave up on finding my favorite Penney's brands and shopped at other stores at Christmas.
Apr 8, 2013 6:09PM
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Just like when Sears tried Every-Day-Low-Price back in the 90's and failed.  If your customer is used to telling their friends how much they saved when they bought X @ JCP, then you take away their glory by taking away all "sales", then they wont shop their anymore.  If you take away your customers bragging rights, then they go somewhere else to keep their bragging rights.
Apr 8, 2013 6:20PM
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Took long enough.  This guy never could figure out the difference between an Apple store and a big box department store.  The Apple stores are set up to make anyone look like a retail genius.  The stores are small square footage.  The merchandise is not only high-priced and high-margin, it's also merchandise people will make a point of buying at an Apple store.  This all adds up to one of retail's most revered measuring sticks:  sales dollars per square foot. 

 

You are not going to get the same dollars per square foot out of any big box department store, regardless of who you are or what the store is.  JCP has to sell one hell of a lot of merchandise to equal the sales dollars and margin of one IPod once you factor in the store size.  Divide the JCP square footage by the Apple square footage, then multiply by the sticker price and the margin of the IPod to determine just what JCP needs to sell to be on par.  The numbers will not only be in the thousands of dollars per square foot, they will be totally unrealistic for the type of store JCP is.

Apr 8, 2013 6:22PM
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Too late .. the men's clothing line absolutely SUCKS. 
Apr 8, 2013 6:29PM
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The beautiful advertising didn't match the poor displays. I wanted to shop there but the disconnect was too great. The store I saw last weekend had bad displays and junky clothing. Either they step it up or they will lose like Mervyns.
Apr 8, 2013 6:23PM
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Seems like the long time "older" generation Penney's stalwarts came through to convince the Shareholders that Johnson's fixes weren't saving the Penney's name. Its about time! Thanks Penney's!!
Apr 8, 2013 6:11PM
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Itsalltoomuchfun......

 

 

 

The article states he will be leaving with a guaranteed 150 MILLION!!

 

Good riddance!

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