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| JC Penney replaces CEO Ron Johnson with predecessor Mike Ullman | JC Penney replaces CEO Ron Johnson with predecessor Mike Ullman |
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| JC Penney's board of directors has ousted its chief executive, Ron Johnson, after 16 months on the job as a risky turnaround strategy backfired and led to massive losses and steep sales drops. | JC Penney's board of directors has ousted its chief executive, Ron Johnson, after 16 months on the job as a risky turnaround strategy backfired and led to massive losses and steep sales drops. |
| Penney said on Monday in a statement that it had rehired Johnson's predecessor, Mike Ullman, 66, who headed the department store chain for seven years until November 2011. | Penney said on Monday in a statement that it had rehired Johnson's predecessor, Mike Ullman, 66, who headed the department store chain for seven years until November 2011. |
| The announcement comes as a growing chorus of critics including a former Penney chief executive, Allen Questrom, called for Johnson's resignation as they lost faith in an aggressive overhaul plan that included getting rid of most discounts in favour of everyday low prices and bringing in new brands. | The announcement comes as a growing chorus of critics including a former Penney chief executive, Allen Questrom, called for Johnson's resignation as they lost faith in an aggressive overhaul plan that included getting rid of most discounts in favour of everyday low prices and bringing in new brands. |
| The biggest blow came last week from Johnson's strongest supporter, the activist investor and board member Bill Ackman, who had pushed the board in the summer of 2011 to hire Johnson to shake up the dowdy image of the retailer. He reportedly told investors on Friday that Johnson's tenure "has been something very close to a disaster". | The biggest blow came last week from Johnson's strongest supporter, the activist investor and board member Bill Ackman, who had pushed the board in the summer of 2011 to hire Johnson to shake up the dowdy image of the retailer. He reportedly told investors on Friday that Johnson's tenure "has been something very close to a disaster". |
| On Saturday Ullman received a phone call from Penney's chairman Thomas Engibous asking him to take back his old job, according to Penney spokeswoman Kate Coultas. Neither Johnson nor Ullman was available for an interview. | On Saturday Ullman received a phone call from Penney's chairman Thomas Engibous asking him to take back his old job, according to Penney spokeswoman Kate Coultas. Neither Johnson nor Ullman was available for an interview. |
| Until early last week some analysts thought the board would give the former Apple Inc and Target Corp executive until later in 2013 to reverse the sales slide. Johnson was in the midst of rolling out shops devoted to brands like Joe Fresh and home furnishings designer Jonathan Adler. The new shops, which started opening last year, had been faring better than the rest of the store. | Until early last week some analysts thought the board would give the former Apple Inc and Target Corp executive until later in 2013 to reverse the sales slide. Johnson was in the midst of rolling out shops devoted to brands like Joe Fresh and home furnishings designer Jonathan Adler. The new shops, which started opening last year, had been faring better than the rest of the store. |
| Johnson's removal marks a dramatic fall for the executive who came to Penney with much fanfare. There were lofty expectations for the man who made Apple's stores cool places to shop, and before that, pioneered Target's successful "cheap chic" strategy by bringing in products by people such as home furnishings designer Michael Graves at discount-store prices. | Johnson's removal marks a dramatic fall for the executive who came to Penney with much fanfare. There were lofty expectations for the man who made Apple's stores cool places to shop, and before that, pioneered Target's successful "cheap chic" strategy by bringing in products by people such as home furnishings designer Michael Graves at discount-store prices. |
| Few questioned Johnson's savvy when it was announced in June 2011 that he was leaving his role as Apple's senior vice-president of retail to take over the top job at Penney, a chain that had gained a reputation in recent years of having boring stores and merchandise | Few questioned Johnson's savvy when it was announced in June 2011 that he was leaving his role as Apple's senior vice-president of retail to take over the top job at Penney, a chain that had gained a reputation in recent years of having boring stores and merchandise |
| Penney's stock price Monday evening showed investors' frustration with Johnson. When news began to leak after the market closed that Penney was ousting Johnson, the stock, which had closed at $15.87 in the regular session, climbed nearly 13% to $17.88 in after-hours trading. But as pleased as investors were about getting rid of Johnson, they didn't appear impressed with his replacement. After Penney announced Ullman would take over, the stock reversed course falling as far as 11% from its regular closing price, to $14.10 and 21% from its after-hours high. | Penney's stock price Monday evening showed investors' frustration with Johnson. When news began to leak after the market closed that Penney was ousting Johnson, the stock, which had closed at $15.87 in the regular session, climbed nearly 13% to $17.88 in after-hours trading. But as pleased as investors were about getting rid of Johnson, they didn't appear impressed with his replacement. After Penney announced Ullman would take over, the stock reversed course falling as far as 11% from its regular closing price, to $14.10 and 21% from its after-hours high. |
| Under Ullman the chain brought in some new brands such as beauty company Sephora and exclusive names like MNG by Mango, a European clothing brand, but he didn't do much to transform the store's stodgy image or to attract new customers. He is expected to serve mostly as a stabilising force, not someone who will make changes that will completely turn the company around. | Under Ullman the chain brought in some new brands such as beauty company Sephora and exclusive names like MNG by Mango, a European clothing brand, but he didn't do much to transform the store's stodgy image or to attract new customers. He is expected to serve mostly as a stabilising force, not someone who will make changes that will completely turn the company around. |
| "What they need is a little bit of stability and essentially adult supervision," said Craig Johnson, president of Customer Growth Partners, a retail consultancy. "[Ullman] did nip and tuck surgery," said Craig Johnson, president of Customer Growth Partners, a retail consultancy. "But this was a place that needed radical surgery." | "What they need is a little bit of stability and essentially adult supervision," said Craig Johnson, president of Customer Growth Partners, a retail consultancy. "[Ullman] did nip and tuck surgery," said Craig Johnson, president of Customer Growth Partners, a retail consultancy. "But this was a place that needed radical surgery." |
| Sozzi said he thinks that Ullman will only serve as an interim CEO. He expects the board will hand off the job to another executive who may want to take the company private. Ullman is getting a base salary of $1m and the company didn't sign an employment agreement, according to a Securities and Exchange Commission filing. | Sozzi said he thinks that Ullman will only serve as an interim CEO. He expects the board will hand off the job to another executive who may want to take the company private. Ullman is getting a base salary of $1m and the company didn't sign an employment agreement, according to a Securities and Exchange Commission filing. |
| Johnson's future at Penny became uncertain after the department store retailer reported dismal fourth-quarter results in late February that capped the first full year of a transformation plan gone wrong. Penney amassed nearly a billion dollars in losses and its revenue tumbled almost 25%, to $12.98bn, from the previous year's $17.26bn. | Johnson's future at Penny became uncertain after the department store retailer reported dismal fourth-quarter results in late February that capped the first full year of a transformation plan gone wrong. Penney amassed nearly a billion dollars in losses and its revenue tumbled almost 25%, to $12.98bn, from the previous year's $17.26bn. |
| Under Johnson, 54, Penney ditched coupons and most of its sales events in favour of everyday low prices. It began bringing in hipper designer brands such as Betsey Johnson and updating stores by installing specialty shops devoted to brands such as Levi's to replace rows of clothing racks. Johnson's goal was to reinvent Penney's business into a trendy place to shop in a bid to attract younger, wealthier shoppers. But Johnson's plan turned off shoppers who were used to heavy discounting. Once-loyal customers have strayed from the 1,100-store chain. It has not been able to attract new shoppers to replace them. | Under Johnson, 54, Penney ditched coupons and most of its sales events in favour of everyday low prices. It began bringing in hipper designer brands such as Betsey Johnson and updating stores by installing specialty shops devoted to brands such as Levi's to replace rows of clothing racks. Johnson's goal was to reinvent Penney's business into a trendy place to shop in a bid to attract younger, wealthier shoppers. But Johnson's plan turned off shoppers who were used to heavy discounting. Once-loyal customers have strayed from the 1,100-store chain. It has not been able to attract new shoppers to replace them. |
| Initially Wall Street supported Johnson's ideas. In a vote of confidence investors drove Penney's stock up 24% to $43 after Johnson announced his vision in late January 2012. But as Johnson's plans unraveled Penney's stock lost more than 60% of its value. Credit rating agencies downgraded the company deeper into junk status. On Monday the stock closed down about 50% from when Johnson took the helm. | Initially Wall Street supported Johnson's ideas. In a vote of confidence investors drove Penney's stock up 24% to $43 after Johnson announced his vision in late January 2012. But as Johnson's plans unraveled Penney's stock lost more than 60% of its value. Credit rating agencies downgraded the company deeper into junk status. On Monday the stock closed down about 50% from when Johnson took the helm. |
| In one of the biggest signs of the board's disapproval of Johnson's performance, Johnson saw his 2012 compensation package plummet nearly 97% to about $1.9m, according to a Securities and Exchange Commission filing last week. He didn't get any stock or option awards, or a bonus. In 2011 he had received a stock award worth $52.7m on the day it was granted. The award was given to Johnson after he was named CEO and made a $50m personal investment in the company. | In one of the biggest signs of the board's disapproval of Johnson's performance, Johnson saw his 2012 compensation package plummet nearly 97% to about $1.9m, according to a Securities and Exchange Commission filing last week. He didn't get any stock or option awards, or a bonus. In 2011 he had received a stock award worth $52.7m on the day it was granted. The award was given to Johnson after he was named CEO and made a $50m personal investment in the company. |
| In another blow to Johnson's turnaround strategy, Vornado Realty Trust, one of Penney's biggest shareholders, sold more than 40% of its stake in the company last month. The company's chairman and CEO, Steve Roth, sits on Penney's board. | In another blow to Johnson's turnaround strategy, Vornado Realty Trust, one of Penney's biggest shareholders, sold more than 40% of its stake in the company last month. The company's chairman and CEO, Steve Roth, sits on Penney's board. |
| During the fourth quarter that ended 2 February Penney's loss widened to $552m, or $2.51 per share, up from a loss of $87m, or 41 cents per share, a year ago. Total revenue dropped 28.4% to $3.88bn. | During the fourth quarter that ended 2 February Penney's loss widened to $552m, or $2.51 per share, up from a loss of $87m, or 41 cents per share, a year ago. Total revenue dropped 28.4% to $3.88bn. |
| Penney's results for the full year were even more staggering. For the fiscal year Penney lost $985m, or $4.49 per share, compared with a loss of $152m, or 70 cents per share, in the year ended 28 January 2012. | Penney's results for the full year were even more staggering. For the fiscal year Penney lost $985m, or $4.49 per share, compared with a loss of $152m, or 70 cents per share, in the year ended 28 January 2012. |
| While acknowledging during a fourth-quarter conference call with investors that Penney had made some mistakes, Johnson said it would start offering sales in stores every week – about 100 of the 600 or so the chain offered each year prior to his turnaround plan – and would bring back coupons. | While acknowledging during a fourth-quarter conference call with investors that Penney had made some mistakes, Johnson said it would start offering sales in stores every week – about 100 of the 600 or so the chain offered each year prior to his turnaround plan – and would bring back coupons. |
| Critics have said that one on Johnson's greatest missteps was that he did not test the pricing plan with shoppers before rolling out the strategy. He argued that testing would have been impossible because the company needed quick results and that if he hadn't taken a strong stance against discounting he would not have been able to get new stylish brands on board. | Critics have said that one on Johnson's greatest missteps was that he did not test the pricing plan with shoppers before rolling out the strategy. He argued that testing would have been impossible because the company needed quick results and that if he hadn't taken a strong stance against discounting he would not have been able to get new stylish brands on board. |
| During his tenure Johnson had spoken of being around for the long haul and referred to his plan as a multi-year strategy. But the company's board was not willing to wait to see how those plans would turn out after racking up such severe losses so quickly. Now that Johnson is out, the worry on Wall Street is that Ullman won't be able to turn around business fast enough to finance the transformation of its stores. In November Penney said that it would end the latest fiscal year with $1bn in cash. Penney wound up ending the year with $930m in cash, which was better than analysts had feared but below the company's target. | During his tenure Johnson had spoken of being around for the long haul and referred to his plan as a multi-year strategy. But the company's board was not willing to wait to see how those plans would turn out after racking up such severe losses so quickly. Now that Johnson is out, the worry on Wall Street is that Ullman won't be able to turn around business fast enough to finance the transformation of its stores. In November Penney said that it would end the latest fiscal year with $1bn in cash. Penney wound up ending the year with $930m in cash, which was better than analysts had feared but below the company's target. |
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