Former Apple retail chief Ron Johnson fired from J.C. Penney

[avaistheone1]

Source: Fortune

FORTUNE -- Ron Johnson, the former Target (TGT) manager who tried to save the ailing J.C. Penney (JCP) using lessons he learned building Apple's (AAPL) retail empire was fired Monday.

CNBC had the scoop and the Wall Street Journal confirmed it.

But his strategy -- selling boutique brands at fixed prices to customers raised on clearance sales -- failed spectacularly. The company lost $4.3 billion in sales in 2012, including a 28.4% drop in the all-important holiday season.


Read more: http://tech.fortune.cnn.com/2013/04/08/apple-johnson-penney-fired/

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Also:

JC Penney ousts CEO Ron Johnson, brings back his predecessor

Ron Johnson was ousted as chief executive of J.C. Penney Co. after a remarkably short and gaffe-filled tenure that succeeded mainly in driving away customers.

Johnson was lured 17 months ago from a top job at Apple Inc., where he was celebrated for pioneering the technology giant's cutting-edge retail stores. But he stumbled badly at J.C. Penney, pursuing an unorthodox upscale strategy that alienated the company's budget-minded base.

http://www.latimes.com/business/la-fi-0409-penney-ceo-20130409,0,329826.story



It's official and thank God! Hopefully this grand iconic American company will be saved.

[SunSeeker]

1. They're definitely going for lower prices, judging by the JCP fliers in my mail. nt

[avaistheone1]

2. They sure are. Over the last several weeks I have received discount coupons from them for

three different sales.

Johnson was too arrogant. He didn't pay attention to customers and waited until the last minute to bring the sales back. I just hope the company survives. They sell good quality products and have great employees. Quite a few of Penney's employees have been their many years. Unfortunately Johnson let quite a few of these employees go.

[progressoid]

6. Yep. But first they need to raise the price.

I know someone that works there. She said that on Monday they started changing the prices on all the formerly "fixed price" items that will be on sale in the near future.

The irony is that those sales and bargains that people are spending their money on will actually make Penneys more money.

[Sherman A1]

3. Excellent!

Long overdue.

[protect our future]

4. I wonder if their "Joe Fresh" line

was the final nail in his coffin. "Joe Fresh" was a highly advertised new line to be opened in the spring. When it finally came out, my first reaction was anger that anyone would think I'd actually buy that ugly stuff. I felt insulted.

[liberal N proud]

5. More likely the Martha Stewart debacle

[Kablooie]

13. I know nothing about clothes...

But I just looked at the Joe fresh ads and instantly knew I didn't want any of those things.

Bright pink pants for men and dumpy flowered Mao jackets for women.
All sold with condescending marketing phrases.

Yuk.

[protect our future]

32. LOL! Exquisite description!

[bucolic_frolic]

7. History Repeats Itself

Still reminds me of the old Kmart bankruptcy, 2002.

In September 2001, the CEO and his marketing guru, a former Walmart
executive as I remember, began a price war by discounting everything
in the store. In each aisle, hundreds of floppy stickers protruded from the
shelves showing the discount. Revenue plunged, it was hard to see the
stickers and the savings, and within a few months - kaput.

Why do companies become CEO Laboratories? It's not the first instance.

"On January 22, 2002, Kmart filed for Chapter 11 bankruptcy protection under the leadership of its then-chairman Chuck Conaway and president Mark Schwartz.[16] Conaway, who had had success building up the CVS Corporation, had accepted an offer to take the helm at Kmart along with a loan of some $5 million. In a scandal similar to that involving Enron, Conaway and Schwartz were accused of misleading shareholders and other company officials about the company's financial crisis while making millions and allegedly spending the company's money on airplanes, houses, boats and other luxuries. At a conference for Kmart employees January 22, Conaway accepted "full blame" for the financial disaster. As Kmart emerged from bankruptcy, Conaway was forced to step down and was asked to pay back all the loans he had taken."

http://en.wikipedia.org/wiki/Kmart

[CBHagman]

8. Their newspaper ads were enough to put me off.

It was clear they were selling an image, rather than luring the customer with just the right item at the right price. My association with J.C. Penney's was that it was a good all-purpose department store, but the ads said, "Look at our models. Look at the design we've come up with for this page!" It wasn't about the products.

[MannyGoldstein]

9. Who could foresee that it could come to this?

Apple and J.C. Penney or such similar companies, I'd think that Johnson's expertise would transfer perfectly.

Not.

[onehandle]

10. He made Target great. He made Apple Stores the most copied store in history.

But forward thinking didn't work with your Grandmother's department store.

[BlueStreak]

18. Jobs made Apple. The rest were just empty suits riding coattails

And I bet if we knew the history at Target, we would find something similar.

Any moron can operate a stare where the customer is captive. Customers didn't buy Apple product because of anything Ron Johnson did. They bought Apple products because they bought into the Steve Jobs religion. The stock price went up with the market for awhile after he died, but clearly the company is on the other side of that hill, losing 30% of its value in the last 7 months.

Hey, there's an idea. Maybe Apple will hire Johnson back.

These empty suits always seen to end up with a load of money in their pockets.

[onehandle]

20. That's been the speculation today on tech blogs.

That position is still open @ Apple.

As far as your 'Steve Jobs religion' comment.

iPhones have been cutting into Android's 'lead' in the last few months. And makes more money for Apple than all the other phone companies combined.

iPhones are ubiquitous. Android is the new cult.

[BlueStreak]

22. Be that as it may, none of that was Johnson's doing.

As far as I can tell, his lone significant contribution to Apple was creating this "Genius bar" persona thing. That worked out, but was not central to Apple's success. I mean, if I would have had that job and I decided to call them "Goofs that will fix your computer", I bet Apple would still be just about as successful.

Regarding hiring Johnson back to Apple, I really was just tossing that out as a joke, but I imagine there are some people at Apple who are feeling enough panic to try that. That would be a big mistake, IMHO.

Apple needs to realize they have a good franchise -- a cash cow they can milk for a long time. But the days of people breathlessly waiting for Steve Jobs' next pronouncement are over. They need to be in cash cow mode.

[mahatmakanejeeves]

11. From JoeMyGod:

Recent regulatory filings show that he was guaranteed a $150 million payout if he resigned or was fired.

I'm glad I'm not a JCP stockholder.

[BlueStreak]

19. The really crazy (outrageous / sign of the times) thing is ...

that is was a HEDGE FUND manager that forced JCP to take on Ron Johnson. It wasn't the board per se. This hedege fund had become the largest shareholder. And chances are that there was some under-the-table deal that Johnson would do things to rev up the stock price, and the hedge fund would be highly leveraged to capitalize on that. They probably didn't give a shit what happened to the company. It is all about making money through leverage and insider trading.

Or even worse, maybe this hedge fund pushed Johnson on the company to drive the stock DOWN. If a hedge fund manager expects the price to go down, he can make a fortune on that.

Somebody should do a very serious investigation into the trading of this William Ackman. If he shorted JCP when he pushed Johnson in, that starts to look like a huge insider trading thing.

http://www.latimes.com/business/la-fi-0409-penney-ceo-20130409,0,329826.story

[BlueStreak]

23. Ackerman is starting to get a lot of attention

See http://www.reuters.com/article/2013/04/09/us-jcpenney-ackman-idUSBRE93815220130409

This article speculated that he LOST $500 M. I thought the idea of a "hedge fund" was to invest in a manner that protected against big risks. I guess "hedge funds" are actually just private funds that are able to gamble with far less transparency than, say, Vanguard's funds, on the theory that hedge fund customers are much more sophisticated. How's that working out?

Anyway, I still have a real suspicion that this story has it completely backwards -- that Ackerman planted a stooge into JCP, and then shorted the company like crazy. He made sure Johnson pocketed over $100M. JCP lost about $3B in market cap in the past 6 months. If Ackerman shorted the company -- perhaps in private accounts not seen by his hedge fund customers, there was a lot of profit to be made there.

I don't have any evidence of that. I'm not accusing anybody of anything. I'm just saying it is a real possibility that ought to be investigated. I found Johnson's dismissal to be handled is a really bizarre fashion, first retaining him at a big salary cut, then firing him (after he was able to cash in a huge deal), and then calling back the previous CEO. This feels to me like a "my work is finished here (wink, wink)" deal.

[RobinA]

12. To Me

the biggest mistake was calling the store JCP. What the freak is a JCP? I'll never understand why managers throw away brand names like that. Course, I'm middle-aged, so what do I know. Don't shop at Penneys, hate Target, still mourn the loss of our K-Mart, which caved like a tent in a windstorm the minute WalMart came to town.

[DotGone]

17. Maybe he was trying to lure in the hispters

Think of the viral marketing on Twitter and Instagram with DDP pulling a DDT on RVD with CP3 flopping in the aisles of JCP .

[frylock]

14. wonder what kind of eight-figure severance he received for all his good work?

[Volaris]

21. posted upthread,

he got 150M for screwing up and getting fired.

'cause THAT'S money well spent, if you are trying to GORW your company...

[riqster]

15. Good news nt

[Beacool]

16. Good news for JC Penney.

Johnson made a fundamental mistake. He thought that by trying to make Penney's more hip that the customers would flock to the store. The clientele of Penney's was older and knew what it liked. When they no longer were able to find the name brands that they were familiar with, they left in droves. Worse yet, the younger people that Johnson was trying to attract failed to show up.

I think that their best bet would be a fusion of both styles. Bring back the brands that kept the older customers coming back for years and also carry some of the trendy brands with the hope of attracting the younger set.

[BlueStreak]

24. It wasn't just a lack of the brands. It was a spooky atmosphere in the store.

When I went into a JCP recently, the store reminded me of the great Twilight Zone episode The After Hours

Jump to about the 3:30 mark (or better yet, watch the whole thing. It is wonderful.) This is what it felt like. It seemed like they had decided to get into the white space business. There was a little table of sweaters here and a rack of jackets over there, and a tree of about 15 neckties, but mostly just empty space.

OK, I understand that I am not a fashion leader. I don't even shop that often. But I always thought the purpose of a store was to offer merchandise. It seems like Johnson was so busy setting up his "cool bar" or whatever the concept was that he forgot about the merchandise. "No problem. Everybody has merchandise. What sets us apart is our atmosphere."

Marsha got her gold thimble after talking to a rather peculiar clerk. I got my pack of handkerchiefs after speaking with an equally peculiar clerk.

[NCarolinawoman]

25. Their catalogs had taken on that same minimalist look.

Lots of white space, everything repetitive and the same size, and very very youth oriented. I would trash (recycle ) them as soon as they came in the mail. Stopped bothering to look at them.

[Beacool]

26. I like The Twilight Zone.

I hadn't seen that episode. Thanks for posting it.

Yeah, Penney's has that empty feeling right now. I just went through the store this evening. The one at my mall is going through renovations, so it looked even emptier than usual. I hope that new management can right up the ship. I would hate to see it go the way of other iconic stores that no longer exist.

[BlueStreak]

27. There is another reason for the empty feeling

Johnson did this "store in a store" thing, which effectively cut the merchandise by about half. That was bad enough. But now they have had two quarters in a row with huge reductions in sales -- like 30% reductions. When Wal*Mart sees a 2% decline, the analysts run around with their hair on fire. Penney's is dropping 30-freaking percent.

As a consequence, they are in hock to their suppliers up to their eyeballs. That is the one and only reason they brought back the prior CEO. They figure he is the only person who has the relationships with these suppliers to go, hat in hand, begging for extended credit terms to get them through another quarter.

There are people saying that if they can't get the bleeding stopped by September, they won't make it through the Christmas season.

[Beacool]

28. I would hate to see that happen.

In many malls JC Penney is the anchor at one end of the mall. What would a mall be without anchors like Penney's, Sears and Macy's? I sincerely hope that they rebound.

[BlueStreak]

30. So do I. I have some friends who depend on JCP for their family income.

It makes me really angry to think of the fat old white men sitting around in Texas with all their clever hedge fund ideas about how they can flip this company for billions in profits -- and as a result hurt so many decent, hard working people.

And you make an excellent point. It is not just the employees. Most of their stores are anchoring smaller shopping plazas. If they go under, it hurts a lot of people outside of JCP.

[Pterodactyl]

29. Good news. My experience that the changes at JCP were a total flop.

[JI7]

31. there are a lot of people who only go to the discounted Racks

they wont even look at the regular price stuff.

i think they feel like they are getting a better deal.

i use to have a job where i tested this out. put some of the regular price items on sale but raised the price so the discount amount would in the end still be the same price or in some cases even higher. and we ended up selling more.