Ron Johnson should return to Apple
He helped design the tech giant's iconic and highly profitable stores and is fresh on the market after a failed stint at JC Penney.
Former J.C. Penney (JCP) CEO Ron Johnson is looking for work after being ousted at the retailer for poor performance, horrendous sales figures, a slumping stock price, and concerns about lost consumers. What better place to return to glory than the place that made him famous: Apple (AAPL).
Johnson was relieved of his duties Monday evening after J.C. Penney shares had slumped by 50% since he took over. Johnson's plan was to turn the Plano, Tex., retailer into a mall-within-a-mall concept, taking unused square footage and setting up specialty shops, breaking the traditional department store model.
This was a grand and ambitious plan from the start. But Johnson confused, and in some cases alienated, core customers by taking away coupons and muddling the company's message. The company's most recent earnings report demonstrates that, with revenue down 30% year over year. The year-to-date share price says even more, with the stock off 19.5%, compared with nearly a 10% gain in the S&P 500 ($INX).
Despite concerns about his plan and a seemingly never-ending falling share price, Johnson is still an intelligent retailer, having helped design the Apple Stores you see today and to shape Target (TGT) before that. Apple CEO Tim Cook is looking for a new head of Apple Retail, now that John Browett has been relieved of his duties (TheStreet). Cook admitted that Browett was a mistake, and since October he has been actively looking for a candidate to lead Apple's retail stores.
Johnson worked with then-CEO Steve Jobs to create Apple's stores, which Cook has said are the key to Apple's success. Jobs is no longer there, and the shine is off Johnson, so this would be a different situation than building from the ground up. An appointment of Johnson by Cook could even become a lightning rod for Apple, which has received its fair share of criticism in recent months. From concerns over product innovation to a slumping stock price -- sound familiar, J.C. Penney investors? -- Apple has been left in the dust in the minds of certain investors.
There has even been some criticism from Apple retail employees that Johnson's coming back to Apple wouldn't be the right answer. There are concerns that Johnson is too old and not the young, hip answer Apple needs. But that thinking misses the forest for the trees. In every crisis, there is an opportunity. Johnson's crisis at J.C. Penney could be his opportunity to re-emerge at Apple, allowing the tech titan to continue in its battle with Samsung, Google (GOOG) and others.
Johnson, despite his age, is still full of fresh ideas. The idea of turning J.C. Penney into a mall was something that had never been tried and has been lauded publicly. Former J.C. Penney CEO Allen Questrom was quoted recently as saying the new shops "are very creative, very well done," but concerns over whether consumers wanted the shops were another story.
New ideas don't happen often in retail, and Johnson is someone with a track record for innovation in a stodgy industry. Critics shouldn't be so quick to dismiss a Johnson return to Apple just yet. At Apple, he would be out of the spotlight, and have ample ammunition (namely Apple's incredibly strong balance sheet) to put his vision to work.
Apple Stores are still the most profitable retail operations per square footage in the world, surpassing even Tiffany (TIF). Johnson is responsible for a large part of that. Apple was built on innovation, and if Johnson still has any left in him Apple would be wise to at least look his way.
Window shopping never hurt anyone's wallet.
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