J C Penney Ousts Ron Johnson
When Ron Johnson left the sales division of Apple, and took the helm at JC Penney, optimism reigned. The experiment was a failure, and today Johnson is out as Penney’s CEO. Former CEO Mike Ullman will rejoin the company.
Ullman had been head of the 110 year old retailer from Dec. 1, 2004 to Oct. 31, 2011, until Johnson replaced him.
Johnson’s ideas of “no sales”, and a “three-tiered” pricing strategy were unsuccessful. Complaints by customers who liked sales forced him to reverse his policy. And customers were confused about the pricing levels.
When he made the focus of his advertising campaign ‘lifestyle’ instead of price, he discovered customers wanted to know how much something would cost.
Fiscal year 2012 showed a loss of 4 billion dollars, and Penney’s stock closed today at 15.87, which is less than half of its value when Mr. Johnson was announced as the new CEO in June, 2011. With 13 billion dollars in sales, it was far below its competitors Macy’s and Kohl’s.
The company reported a stunning $522 million loss and a nearly 30 percent drop in sales for the last quarter. The company slashed Johnson’s pay by 97 percent for 2012, to $1.9 million.
Thomas Engibous, chairman of the company’s board, praised Ullman in a statement Monday: “We are fortunate to have someone with Mike’s proven experience and leadership abilities to take the reins at the company at this important time. He is well-positioned to quickly analyze the situation jcpenney faces and take steps to improve the company’s performance.”
There is some doubt that Penney’s will make a complete return to their “old ways”. When interviewed Ullman simply told reporters, “there’s a lot of work to do”.