- In searching for a new CEO, J.C. Penney is considering former CEOs with experience in apparel merchandising and big box retail, who are “in tune with today’s challenges of being both an online and store retailer,” chairman Ron Tysoe told the Dallas Morning News. “We’re not looking for someone to reinvent J.C. Penney,” he also told the Morning News’ Maria Halkias.
- The department store retailer is in the awkward position of searching for a chief executive after the sudden departure of Marvin Ellison in May. Tysoe told the Morning News that the company is attracting a “number of high-caliber candidates,” some of whom are seeking out the position and others who are being approached.
- The board’s process doesn’t have a deadline, he said. But, while the retailer won’t rush to fill the post, there is a sense of urgency, he also said.
Penney is staying close to home in its search for a new CEO to lead it through a turnaround that seems never-ending. The board’s decision to focus on execs with experience in apparel merchandising and big box retail could have something to do with the results of its past two CEOs.
Marvin Ellison, who came from Home Depot, helped bring the company back from financial disaster, but he may not have had the apparel chops to fix the retailer’s struggle in women’s and other apparel. Ron Johnson, who preceded Ellison, didn’t even have retail experience. Many see Johnson’s attempts to transform Penney’s pricing and assortment as disastrous — to radical and executed too quickly — though some believe that had some of his ideas been given a chance, they may have worked in the long run.
The company posted net losses of $795 million in 2012, $1.2 billion in 2013 (the year Johnson left) and $717 million in 2014. Comparable sales in 2012 fell a harrowing 25%. The next year, the company added more than $2.5 billion in debt to its books. With Ellison at the reins, Penney largely pulled back the decline of sales and money, and even made a profit in 2016, followed by a $116 million loss last year.
But the company has struggled to change the trajectory in its sales. In its most recent quarter across the board, Penney’s numbers fell short of analyst estimates: Net sales fell 4.3% to $2.58 billion, and comparable store sales rose modestly by 0.2%, an improvement over last year’s 3.5% decline. For the quarter, the department store retailer posted a net loss of $78 million, less than half of last year’s Q1 loss of $187 million.
For now, the retailer is in good hands with its remaining leadership, according to GlobalData Retail Managing Director Neil Saunders. But the urgency expressed by Tysoe is well-placed.
“As much as we recognize many of the positive changes JCP has made to date, and as much as we respect the highly engaged management team, we believe that now is the time to up the pace of change with bolder and more ambitious moves across all categories,” he said in comments emailed to Retail Dive. “The biggest problems for JCP are relevance and profile. While improvements have been made to certain areas, JCP is still not standing out amongst a sea of competing products and concepts. This means it is not a destination for most things, other than perhaps beauty, and is struggling to drive traffic to stores.”