J.C. Penney Could Be Sold After Ron Johnson Ouster
By Matt Townsend and Jeff Green - Apr 9, 2013
J.C. Penney Co. (JCP) made a radical break with tradition by hiring Silicon Valley wunderkind Ron Johnson as chief executive officer. With Johnson gone, the chain may have to pursue even more radical options, such as selling itself.
After suffering a 25 percent annual sales decline, J.C. Penney yesterday ousted Johnson, 54, and replaced him with his predecessor, Myron E. Ullman III, 66. Investors, who pushed the shares up 13 percent on news that Johnson was out, abruptly sold after learning Ullman was the new CEO. J.C. Penney dropped 9.3 percent to $14.40 at 9:45 a.m. in New York.
Ullman faces several tough choices. He’ll have to decide whether to continue Johnson’s strategy of turning the chain into a collection of boutiques or return to a more traditional department-store model. Ullman will also have to consider whether to sell the company or break it up, said Dave Larcker, a corporate governance professor at the Stanford Graduate School of Business in Stanford, California.
“The board is going to have to get much more involved in the strategy of the company,” Larcker said. “People may attack the board, as well, for how this happened. This was a high- profile hire. For it to unravel this quickly is kind of terrifying.”
Cleaning Up
The Plano, Texas-based chain was so damaged under Johnson that Ullman will struggle to turn it around. On Feb. 27, J.C. Penney reported annual revenue dropped to $13 billion, the lowest since at least 1987. Johnson alienated the company’s core customers by doing away with sales and promotions and only recently began trying to win them back by putting discounts front and center again.
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http://www.bloomberg.com/news/2013-04-08/j-c-penney-ousts-johnson-as-ceo-for-former-chief-ullman.html
