J.C Penney’s stock tumbles after key exec’s abrupt exit

“J.C. Penney’s shares are tumbling a day after the department store chain announced the sudden departure of Michael Francis, a former top Target executive brought in last October to help redefine Penney’s brand,” Anne d’Innocenzio reports for The Associated Press.

“Penney’s terse statement Monday gave no reason for Francis’s exit. As president, he was responsible for marketing a new pricing plan that the company says replaced hundreds of sales events per year with lower prices overall as of Feb. 1,” d’Innocenzio reports. “Francis also oversaw merchandising and product development and played a big role in signing up new brands as part of larger plan to transform the company under its new CEO, Ron Johnson.”

d’Innocenzio reports, “The departure is the latest sign of tumult at J.C. Penney, which last month reported a bigger loss than expected and a 20 percent drop in revenue as shoppers fled in confusion over the new pricing strategy, which Johnson spearheaded. During presentations at a recent industry conference this month and following the first-quarter earnings report, Johnson continued to back his pricing strategy, saying the problem was that Penney’s marketing didn’t clearly spell it out. ‘Our marketing, while it is gaining a lot of mind share, is not doing the work it (must) to communicate our pricing strategy and to drive our traffic,’ Johnson told investors last month. With Francis’s departure, Johnson, who came to Penney from Apple Inc., will assume direct responsibility for and oversight of marketing and merchandising.”

Read more in the full article here.

MacDailyNews Take: The current situation makes you wonder if Johnson’s prior success was more about the extraordinary products he was given to sell by Steve Jobs, Jony Ive, and Tim Cook than with his innate retailing abilities.

While we’re not ready to give up on him just yet, there no denying that, so far, Johnson’s reign at Penney’s has been Elopian.

Related articles:
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

43 Comments

  1. He might be like Steve Jobs only he is just starting to assemble his A list helpers; the new products do not even arrive until August. Only then will we know.

    1. I work in that industry. and it BS- new products are in the stores and they aren’t selling. JCP isn’t Apple. They haven’t done well in years and its not going to turn around overnite if ever .The best thing He could do for JCP- is to close it

      1. “Penney’s terse statement Monday gave no reason for Francis’s exit. As president, he was responsible for marketing a new pricing plan that the company says replaced hundreds of sales events per year with lower prices overall as of Feb. 1,”

        This is the very root of the problem. They should not have changed anything, however they should have setup a store within a store or department that culminated in the project that Michael Francis was trying to morph the entire company into.

        Sometimes it’s better to take the bandaid off slowly instead of abruptly.

        Now he’s gone, everyone has a bitter taste in their mouth and the whole thing is a big mess.

        This weekend they need to hold a 50% off sale on a what’s not selling and regroup.

  2. “…shoppers fled in confusion over the new pricing strategy”: Everything is cheaper everyday. With shoppers that can’t handle that I’m surprised that all of them haven’t been caught hanging out in the clothing department playing with matches. While drooling. It sounds like baloney to me.

    1. Shoppers have been brainwashed with the “sale” mentality. This is why it works when retailers can raise prices 15% over regular pricing on an item a week or two before a sale, and then adjust pricing again and advertise 10% off (the recently raised price) and people will buy – at 5% more than they could have purchased the item two weeks before. But, it’s on SALE!!!

      For many people the feeling of getting a deal is more important than them actually getting one.

    1. I’m anti-coupon, and I agree 100% with you. I think (I don’t know for sure) that one of their primary demos is people who actually enjoy coupon clipping and looking through weekly fliers for sales.

      I find myself in much less financial turmoil than friends I know who worry about coupons and sales, as I just go buy what I want / need whether it’s on sale or not. I don’t buy stuff just because it’s on sale; therefore, I can budget and save. If something I want is on sale, great, but I don’t count on it. To me, unless you’re one of those crazy coupon people on TV, it’s a waste of time. You could get a job at Taco Bell and make more than you’d save in the same amount time. That’s just my opinion.

    2. I like the strategy too, but I didn’t understand it until I saw Johnson’s presentation. Only then did I have a clue what the mindless screaming TV ads were about. Those ads alone would keep me away from jcp. They have done an unusually poor job at communicating their concept to their customers. It’s well known that you never buy at regular price at Kohl’s. It used to be that way at jcp. How are people supposed to know things have changed?

  3. I love the concept. In general I do not like the common department store format and plan on supporting JCP. I have purchased more this year from JCP than the past 5 years combined. If the board does not stick with Ron Johnson, they will never see me again. His concept is great from a consumers perspective.

  4. I so disagree with MDN on this. JCP needs to educate the idiot shoppers who have no idea how screwed over they get with sales, sales, sales! JCP has always had great product but I avoided shopping there on a regular basis due to pricing mess. You needed to buy two of something in order to get 50% off of second – but I only needed one! Now it is everyday low, same prices, which as far as I have found easily match their old sale prices. This is a truly a problem of communications and education in my estimation.

  5. JCP’s new marketing is horrendous. My mom is a longtime JCP customer who is so turned off she has vowed never to go back.

    It also doesn’t help that when she went to the local store several times recently, they are only partway through implementing the changes RJ instigated. That’s terrible: they should have waited on the marketing until all the stores were ready. As it is they lured in customers promising things would be different and when it wasn’t, disappointed those people. I, who haven’t been to a JCP since the 1970s, had considered going, but after hearing my mom’s dismal report, decided I wouldn’t bother.

    1. Yeah, I visited our local JCP store, expecting to see the bright new future of department store retail, only to find no obvious changes, other than a big 3D logo front-and-center near the entrance. Now admittedly, I didn’t spend much time looking at the actual merchandise, but if this is supposed to be a reinvention of the business, the changes should have jumped at me the moment I entered the store.

      If they’re truly rolling out things piecemeal, they’re sabotaging the whole plan. You’d never see Apple Stores do a big change in any way other than all at once.

      ——RM

  6. Hey, cut him some slack: not even Steve Jobs could turn Apple around in less than a year. How long has Johnson been in the job? These things don’t happen overnight and I don’t understand why everyone was expecting instant miracles…

    1. He was hired in November. I agree – give the man some time. Few people remember when Apple was swirling the bowl, and how long it took Jobs to assemble the team that turned it around. Now that they’re successful, people assume it was always that way. It wasn’t.

  7. Its a perfectly simple pricing strategy: you always have the lowest price available, unless it’s the first week of the month when the prices are even lower, uses its the second Thursday in which. Ase the red tagged items are the absolute lowest price ever, the green tags are the al
    Ost lowest price and he yellow tags are just the basic lowest price ever, except on the solstice, when the prices are all the very very lowest price ever… At less that’s how I understand it. Definitely a better strategy than advertising a sale in the weekend paper for that week with clear direction on price…

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