JC Penney seeks new chief as CEO exits

Bloomberg

Big Texas-based department-store chain seeks new leader: must be willing to tackle sluggish sales, failed fashion and $4 billion in long-term debt.
JC Penney Co., once again, is searching for a new chief executive after Marvin Ellison was poached by home-improvement retailer Lowe’s Cos. on May 22, a surprise exit that sent JC Penney’s stock down to historic lows.
Whoever takes the job will need to do more than fix JC Penney’s clothing offerings. Ellison, who became CEO in in 2015, tried many initiatives to revive the department-store chain, including improving the online experience, adding big-ticket items like appliances and signing brand partnerships with celebrities.
The moves failed to dramatically improve results, and, like his predecessors, Ellison had to slash prices to clear out inventory.
“JC Penney doesn’t stand for anything but discounting,” said Gabriella Santaniello, founder of retail consultancy A Line Partners. “There’s no identity attached to any of these brands.”
On Tuesday, shares of the Plano, Texas-based retailer dropped to $2.35, their lowest since at least 1980, when Bloomberg started tracking the data. At just under $740 million, JC Penney’s market capitalisation is worth less than a quarter of the value of its inventory.
Ellison’s departure took investors by surprise. Chuck Grom, an analyst for Gordon Haskett, said in a note that it was “pretty evident” that JC Penney was unaware of Ellison’s plans, when the
CEO was active in discussing long-term strategy.
On such a short notice, there’s no obvious outside candidate to replace Ellison, who joined JC Penney in 2014 after 12 years in leadership roles at Home Depot Inc. Before Ellison, the company had to call on former CEO Mike Ullman to return after dramatic transformation efforts during the short tenure of former Apple executive Ron Johnson left the chain in tatters.
The best internal candidate for the top job may be Chief Customer Officer Joe McFarland, according to Burt Flickinger, managing director of Strategic Resource Group LLC, a retail-advisory firm. McFarland joined JC Penney in 2016 to head up its stores, and, like Ellison, has a career in home improvement: He previously was president of the Home Depot’s northern division.