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