A case for keeping JC Penney's CEO

Ron Johnson may be the worst leader that the retail industry has seen in years, but hopefully he has learned a great deal from his mistakes.

By 247 Wall St. Feb 28, 2013 4:09PM

CEO copyright Photodisc, Getty ImagesBased on all the quarterly earnings results of JC Penney Co. Inc. (JCP) since bumbler Ron Johnson took over as chief executive officer, he should have been fired long ago. But there is one reason to keep him on the job: JC Penney cannot survive another "reinvention." 


A new CEO would believe that the retailer's approach to sales and marketing would need a complete overhaul. By the time that happened, JC Penney could be out of money.

 

Johnson may be the worst CEO that the retail industry has had in years -- perhaps decades. However, he may have learned a great deal from his mistakes. Whether he can turn what he has learned into a better plan to salvage JC Penney's fortunes remains a huge risk. But he has taken such a beating, and seen plan after plan fail, that he may be down to considering the few paths that might bring a very modest turnaround. JC Penney's best hope is pathetic, but it is all the retailer has left.

 

The evidence of Johnson's stumbles could not be more powerful. Revenue in the fourth quarter of last year fell by 28.4% to $3.88 million. Same-store sales collapsed by 31.7%. The results were even worse than in the previous three quarters of 2012.

 

Johnson has only once ace in the hole. JC Penney's largest shareholder and board member, Bill Ackman of Pershing Square, owns 18.7 % of the retailer. Ackman has allies on the board who hold even more shares. He essentially controls the public company. Ackman has said he will give Johnson three years to make JC Penney a success. Even if Ackman has changed his mind, his holdings are too large for him to abandon quickly. Ackman could recruit another CEO. By the time that person joined JC Penney and could set a new direction, 2013 would nearly be over.

 

The seeds of a long-shot success at JC Penney would come from Johnson's ability to finally admit that almost his entire plan to make the company a great retailer has failed. After posting poor results, Johnson said that the missteps where his. "I take personal responsibility for these," he said. Johnson also disclosed that he planned to return to some of JC Penney's traditions. As part of his rebuilding effort, he had rejected certain tricks JC Penney used for marketing that had been effective in the past. "We have brought back coupons for our rewards members. Although, we still call them gifts." He had killed the use of coupons last year.

 

Johnson is all JC Penney has left. If he has benefited from his colossal mistakes, the retailer has a very long shot of not failing entirely.

 

More from 24/7 Wall St.

Tags: JCP
17Comments
Feb 28, 2013 6:46PM
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I don't think this CEO learns anything from anything, or he would have realized long ago his off the wall ideas were not going to fly with the American consumer.  J.C. penney used to be the go to place for shopping.  You could count on good merchandise, fair prices, sale prices to die for.  I could make one trip for school shopping for 3 children and outfit them at a very reasonable price.

Penney's shopper don't want designer clothing.  We have Nordstrom's for that.  They have completely lost the concept of the American family and the struggles they are facing right now.

Wake up to reality.  I agree, a woman could do a fantastic job.  SHE is the household consumer.

Feb 28, 2013 5:33PM
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The good ole boys network continues.  Ever think of hiring a WOMAN who can do the job, BIll????
Feb 28, 2013 7:00PM
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As a former employee of JCP during my college days (merchandising assist) JCP has a base that does not do upscale.  The new marketing approach has been horrible.  People that typically shop at JCP expect quality yet reasonable merchandise.  They also want quality at a reasonable price.  Not bells and whistles......trying to appeal to a different set of people was one of the biggest mistakes this CEO could have made.....He created confusion for most of his base shhoppers and his employees as well.  I have spoken with several long term  employees about the changes and they are not happy.  Unhappy employees make for poor customer service.  This is not Apple!

Feb 28, 2013 7:06PM
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He has had it all wrong from the beginning. as a former employee of JCP I can tell him women love sales, coupons and catalogs and he has gotten rid of all of them. He needs to go and fast before he kills the company.
Feb 28, 2013 7:34PM
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When the change was made I lost interest. Not once have I bought anything in the store since it changed over. It's not even appealing. Too much space of nothing. JC Penney used to be my favorite place.
Feb 28, 2013 6:29PM
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Maybe you can Twit this to their CEO. Follow, you Lemming, and you generally end up in line walking off a cliff. LEAD and the world looks to you. Penneys Sears Nordstrom Macys Bloomingdales Hudson and others were merchantiles at the beginning of the 20th Century. They imported from St. Louis, San Francisco, Detroit and Chicago, not Hong Kong. The put their labels on American Made items for the budget-conscious families, not because sweat shops could make them under duress for pennies and you could mark them up as high as you wanted. People go to your stores to get trustworthy stuff, not stuff that looks like trustworthy stuff that no longer exists. Everything in your stores can be gotten for less online. The exact same thing. What specifically do you offer the customer? Your help stocks not helps shoppers. You have shelves and racks of clothes made in Metric nations with American sizes on the labels. Ever measure them yourself? No two items actually are what the tag says they are. What else do you offer? You aren't going out of business because of arbitrage, you are because YOU have no business in your role. When do we learn-- if you let the college degree drive the tractor, he will ruin the farm. Get your lemming butt out of that office suite and go start your OWN enterprise. IOF you are any good, it will get bought out. IF not, you deserve your worth. Right now, you are worthless. Paying for knowledge only works in OZ and you have to be a scarecrow. Everybody else works their way UP and earns that knowledge. GET OUT. STAY OUT. Oh, and put that handheld device down, you Twit. Business is business, be social on your own time.
Feb 28, 2013 7:45PM
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Keep him! Under his leadership jcp should be gone within a year! Good riddance!!
Feb 28, 2013 8:02PM
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It is amazing how a CEO can kill a company.  Arthur Martinez did it to Sears and Ron Johnson is doing it to JCP.  Even WalMart is suffering now.  Gone are the days of the big stores.  They can't find a leader to control their business.
Feb 28, 2013 8:53PM
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it's so simple, it's mind boggling.  penney's cannot adverftise to the upscale demographic and

have merchandise to the masses.  period. 

Feb 28, 2013 8:38PM
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Listen up people! This is the second article bashing JCPenney in one day. The other article posted today for the other retail bashing is Walmart! This is strange! Who hates our department stores? If I didn't know any better I would have thought their after our free enterprise! I think they hate our stores! I hope our stores stay forever!
Feb 28, 2013 7:58PM
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JC Penny needs fresh eyes and ideas. They are still maintaining sub-par products at high prices.  You can walk into a JC Penny and feel like you are walking into a ghost town.  I believe that I can assist JC penny with innovated ideas, Leaning , management leadership.
Feb 28, 2013 8:55PM
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I kinda like the new JCP.  Have you been in one lately?  He's turned it into sort of a down market Macy's or Sak's and that's what it should be.  I like being middle class and spending a little bit more for clothes that are slightly better than walmarts but not as expensive as the others.  I was at JCP today and bought a nice tank top and the check out person used a hand held device to check me out.  There was an upbeat music playing in the store and the store looked like Sak's.  Dunno work's for me.
Mar 1, 2013 8:23AM
Mar 1, 2013 7:07AM
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We like coupons and sales we want our coupons back.
Feb 28, 2013 8:04PM
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Johnson needs to cater even more to the gay crowd.  They'll save his **** or put something in it.
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