“The latest painful chapter in the JCPenney saga has now been written,” Ken Segall blogs eponymously. “CEO Marvin Ellison resigned a couple of weeks back—with the company’s stock price down to a mere $2.43. That’s a particularly brutal number, considering that in 2007 a share of JCP went for $85.”
“Technically, this plummet was co-authored by three CEOs serving four terms — Marvin Ellison, Ron Johnson and two stints by Myron Ullman,” Segall writes. “By numbers alone, it’s hard to tell who was worse. The stock plunged 65% under Ullman (Act I), 54% under Johnson, 58% under Ullman (Act II) and 66% under Ellison.”
“So I was surprised that Ellison received the praise of many writers reporting his resignation. ‘He helped turn around J.C. Penney,’ said The Street. In what universe that happened may never be known,” Segall writes. “Not only do the writers let Ellison off the hook, they seem to rally under a common theme: it’s all Ron Johnson’s fault. After all, Ron was in and out in less than two years, and the stock was decimated during his reign.”
“However, this narrative ignores two major facts. First, JCP had already lost more than half its value before Johnson took the reins. Second, Ullman and Ellison succeeded only in driving JCP further into the ground,” Segall writes. “The truth is, Johnson’s vision was correct and necessary. History has now proven that JCP was (and is) doomed without a radical plan for reinvention. The company committed the classic sin of throwing out the baby with the bathwater.”
Read more in the full article here.
MacDailyNews Take: Always being right is both a boon and a curse, but we’re unfailingly happy to share our gift with you, dear readers. 😉
This is likely our last JC Penney article — to the chagrin of retail department store afficiandos the world over, we’re sure — unless and until JCP goes tits up, in which case we’ll take a moment to remind those who destroyed what’s left of it that they should have stuck with Johnson and given him time to execute his plan instead of panicking and yanking out the plug way too early. — MacDailyNews, May 6, 2013
SEE ALSO:
JC Penney brings back fake prices – May 6, 2013
Three ex-Apple execs exit JC Penney following Ron Johnson ouster – April 11, 2013
Yoshikami: The Ron Johnson disaster at JC Penney – April 9, 2013
Ron Johnson: Apple Stores vs. J.C. Penney – April 9, 2013
Will Apple bring Ron Johnson back? – April 8, 2013
Ron Johnson out as JC Penney CEO, says source – April 8, 2013
Three ex-Apple execs exit JC Penney following Ron Johnson ouster – April 11, 2013
Yoshikami: The Ron Johnson disaster at JC Penney – April 9, 2013
Ron Johnson: Apple Stores vs. J.C. Penney – April 9, 2013
Will Apple bring Ron Johnson back? – April 8, 2013
Ron Johnson out as JC Penney CEO, says source – April 8, 2013
Ron Johnson starting to look a lot more maniacal than brilliant – March 8, 2013
If JC Penney fires CEO Ron Johnson, analyst predicts bankruptcy – March 8, 2013
J.C. Penney CEO Ron Johnson cuts 2,200 more jobs as sales plunge – March 8, 2013
J.C. Penney posts large loss as sales sink further – February 27, 2013
JC Penney CEO Ron Johnson capitulates, brings back sales – January 28, 2013
Apple retail’s Ron Johnson and John Browett have proved the Peter Principle is alive and well – November 13, 2012
CEO Ron Johnson switches J.C. Penney to two-tier pricing with price-match guarantee – July 26, 2012
Why is Ron Johnson’s retail strategy for J.C. Penney failing? – June 26, 2012
J.C Penney’s stock tumbles after key exec’s abrupt exit – June 19, 2012
J.C. Penney reports loss and plummeting sales in 1Q – May 15, 2012
Why Ron Johnson left Apple to head JC Penney – April 30, 2012
J.C. Penney lures another executive from Apple – April 26, 2012
Steve Jobs’ ex-lieutenant Ron Johnson adds $1.5 billion to J.C. Penney in two days – January 30, 2012
J.C. Penney CEO Ron Johnson: What I learned building the Apple Store – November 21, 2011
New J.C. Penney CEO Johnson hiring former Apple co-workers – November 9, 2011
Why Apple’s retail genius Ron Johnson is paying for the privilege of running J.C. Penney – June 15, 2011
Apple’s retail store chief Johnson off to J.C. Penney; expected to become CEO within months – June 14, 2011
When I was a kid my Dad could only afford clothes for us from Kmart and Wall mart. I always wanted clothes from JC Pennys – that was where the rich kids shopped. Oh what a difference 30 years makes.
No disrespect to your Dad, who I will assume was a hard working man taking care of his family, but “Rich kids” never shopped at JC Penney. If you confused the people shopping at JC Penney with rich kids, you must have been dirt poor.
“Wall mart” — really? What do they sell…walls?
(with apologies to Paris Hilton)
Right on MDN !!!
Penney’s was doing OK as far as I’m concerned before Ron Johnson and since. From bad to worse, then again, they are no exception. This country is going down the tubes, we aint seen nothing yet.
This is an oversimplification. Penny was in trouble before Ron got there, but he made it much worse. He had little understanding of Penny’s customers, which he assumed would think the way Apple’s did. He was completely wrong. Penny’s sales plunged.
He tried to totally change Penny’s sales methods, and lost a lot of customers. Once that happens and customers leave for other companies, it’s very difficult to get them back. That was a major push towards where they are now.
Looking at the stock price is a reflection of the problem, but not the problem itself. Likely, nothing anyone else tried later could undue that damage.
What has to be pointed out is that online companies are killing all of these retailers – look at Sears.
Did you read the linked piece? Johnson admitted that he alienated the old customer base before bringing a new segment of customers on board. Fundamental transformation was the only hope of saving JCP, and now everyone can see it.
Sears has done more to kill itself than any outside entity ever could. They were Amazon, before Amazon, but they inexplicably abandoned the mail order business to focus on sales at physical stores.
Absolutely correct. As someone that visited a JCPenny during the Ron years intentionally to see what the deal was, I HAVE to say that it was indeed a more pleasant place to shop with the changes they were putting in. Yes, they lost customers, but the customers they lost were likely just a few years removed from being lost to them permanently (i.e. dead).
At least he was trying to make a diffence in an area where it mattered. Unfortunately, frightened heads prevailed and turned JCP back into a place where old people felt comfortable for a few more years.
People keep saying online sales are killing brick and mortar. but its simply not true .I work in apparel. If I sell a brick store 6000 units of knit tops- for online they only buy about maybe 200 . there just no comparison .and when stores buy specials for online I’m lucky to get 300 units .Its just stores saying that because they are misrun and they have to have an easy excuse
I feel sorry for those who had stock in the company, planning a retirement & have lost so much.
As someone who used to shop at JCPenney’s, I think II have a little insight into the situation.
First, I would primarily place the blame on the Board of Directors. The board just doesn’t understand the JC Penny’s customer.
The board wants to serve the teenage fashion market. The JCPenney’s customer is not the teenage fashion market. The typical JCPenney’s customer is between 30 years old and 80 years old. These customers have kids / grandkids and are more concerned with obtaining quality clothes at a reasonable price than they are with trendy fashions.
Under Ron Johnson, prices soared. Coupons were a “red herring”. My Reebok walking shoes nearly doubled in price. The Arizona house brand of shirts disappeared and it’s replacement was nearly twice the price and not near the quality.
Styles went wild- flimsy materials, crazy colors, normal color selections disappeared. (I don’t care for hot pink, brilliant blue and bright lime green shirts.). Neither did many of the other customers who were ticked about no selection.
Employees complained about being treated poorly under Johnson. No listening to the front line employees who worked with customers. Top management had all the answers.
Employee incentives were removed so hard work and initiative was no longer rewarded. According to the employees I interviewed, pay was down nearly 400% for the top front line employees. Of course, the best employees left and inferior ones took took their place.
Unpacked boxes were left sloppily around the store, clothes unfolded and un hung.
In short, the board is a mess and Ron Johnson was the wrong man for the job.
I don’t understand your math. If employee pay decreased 400% as you claim, and employees were making twice the minimum wage to start, then those same employees would have been paid half the minimum wage. I’m fairly certain we would’ve heard about that happening at JCP.
He wrote: “pay was down nearly 400% for the top front line employees”
Maybe he should explain what a top front line employee is. Is it someone who earns 2X min wage.
Then again, 100% pay reduction would seem to equate to zero pay. if I earn $10 per hour and I get a 100% reduction would that not be $10 – (100% of $10) or $0?
If so, what is 400% pay reduction? You think that means 25% (or 1/4)? I don’t think so.
Maybe someone smarter than me can explain what a 400% reduction is.
I guess they started paying JC Penny for the privilege of coming to work. (You used to pay me $20 an hours, now I pay you $60)
I got the impression that Ron wanted to turn Penney’s into an alternate, less expensive, less hip version of Target.
And he learned revolution is hard, and the revolutionaries that start the revolution usually don’t finish it.
I have an interesting anecdote to share. My father was born in 1902, around the time that Mr. Penney hadn’t yet opened his first store, that was ultimately built in Kemmerer, Wyoming. Prior to that, Mr Penney got his start selling clothing and other items door to door in the surrounding area. He stopped at my grandparents modest home in nearby Diamondville to let my grandfather try on a pair of work pants. As the story goes, while that was going on, Mr. Penney waited patiently on the front porch, holding my father in his arms. My grandfather purchased the britches.
Needless to say, JC Penney stores became a great success, that lasted well into the 1960’s, having provided, up until that time, high quality, durable clothing, and household goods for working families of modest means. About that time, the current decision makers at JC Penney abruptly shifted their focus away from serviceable products at fair prices toward trendy, upscale products that provided lower quality at higher prices. The once wide selection of rugged work clothing virtually disappeared from the stores, along with sturdy clothing for school kids, that had provided good value for the dollar.
This, in my opinion was the start of the downhill slide, and ultimate demise of the JC Penney brand. Of course, all brick and mortar “department” stores are now dropping like flies. I just think JC Penney lost track of their roots, and the essence of Mr. Penney’s original vision, a little too soon.
I was an employee at JCPenney between 2010 and 2016. I saw the company prior to Ron Johnson, during the the renovations that Ron Johnson began and into Marvin Ellison’s reign. Ron Johnson had a brilliant plan unfortunately pushng things too fast and did alienate the core customer. With that said, as a contributor mentioned above that core customer would be dead within the next 5 to 10 years. Johnson was aiming at the younger customer and their children so that there would be a generational growth oncoming. There were people coming into the store that either had never been in and loved it, or said that they were coming in for the first time since being an adult and loved it. Contrary to what another commenter mentioned above, the prices were marked down to almost 80%. For example, a dress shirt costing $34.99 would now be priced at $12.99. This was a price with no coupon and no sale. It was a price that you could get at all times.
It was funny to see the customers reactions when it first began and they accused us of being thieves, cheats, etc. at the registers because they couldn’t use a 15 or 20% coupon. After the dust settled, and Johnson left, the prices immediately went up higher and the happiness quotient went up with customers saying they were so happy. When I told them that they were paying more it didn’t matter as they could use their 15 and 20% coupons. That’s all they cared about.
Johnson also got rid of a lot of dead wood at corporate eliminating over 500 jobs. I’m sure that created an atmosphere of “them against us” and that’s where the problem enlied. Unfortunately at the time a memo was sent saying over 60% of the bandwidth at corporate was used for online streaming. That tells you that there was actual dead wood in corporate offices that needed to be eliminated. It’s Too bad that Ron Johnson couldn’t see his vision through to the end. I think Penney’s would have had a better outcome with it
P.S. and to the poster that said wages were down 400%, actually mine went up. There were never any boxes on the floors end clothing throwing around. You must have been in a real dump.