J.C. Penney Cores An Apple
By David Gill
Last month saw the final transition of J.C. Penney's executive leadership, which began with the appointment of Ron Johnson as Myron Ullman's successor as CEO.
The appointment of Johnson, the former executive at Apple who led that company's retail sector, signaled a number of moves at the top tier of the department-store retailer. In October, in a sudden move, Michael Francis, formerly executive vice president and chief marketing officer at Target, left the mass merchant to become president of J.C. Penney.
Francis and Johnson were colleagues at Target, where Johnson served before joining Apple. In November, J.C. Penney welcomed two other former Johnson colleagues--Michael Kramer, who was named chief operating officer; and Daniel Walker, who was appointed chief talent officer. Both Kramer and Walker worked with Johnson at Apple in the early years of the last decade.
Having set this team in place, Johnson spoke with retail industry analysts on Nov. 14, right after J.C. Penney released its third-quarter financial report. While avoiding specifics, Johnson did say, "I addressed associates when I came on here (on Nov. 1, his first official day as CEO). I told them I'm not here to improve, I'm here to transform."
Johnson added that he is "investing considerable energy in a strategic review of our products, our pricing, our promotional strategies in order to create an exceptional, a new, a better way for people to shop." His ultimate goal is to establish J.C. Penney as "America's favorite store."
Through the first nine months of this year, the company posted a net loss of $65 million, compared to net income of $118 million for the like period of last year. Annual sales have fallen from $19.9 billion in 2006 to $17.8 billion last year.
Thus far, however, Johnson and the rest of the new team have received at least one good review. In a note, financial analysts Bob Drbul, Jessica Schoen, Joan Payson and Stephen Giagola of Barclays Capital said, "We are quite impressed with the quality of the management team being assembled, and see a significant opportunity (for J.C. Penney) to regain ground on sales and operating profits/margin lost over the last several years."