JCPenney: End of the Johnson era, or end of story?

The end of Ron Johnson’s tenure at JCPenney came with unexpected speed this week. (In my case, it happened just before I taught a class of retailing management students about “retail pricing,” and I had a wealth of extra talking points to use.) It’s only been a few days since his firing — and the rehiring of his predecessor Mike Ullman — so there will be plenty of time for RetailWire panelists to mull over the events of the past 18 months. Meanwhile, here’s my immediate reaction:

Mr. Ackman’s vote of “no confidence” last week signaled that the crisis of operating results at JCP showed no signs of improvement. His fellow board members appeared extraordinarily passive during the past 18 months of Ron Johnson’s stewardship. Selecting Mike Ullman to step in appears at first glance to be an attempt to stop the bleeding and save the company, not another stab at “reinvention.”

You can make a case that JCP stores and assortments look crisper and more updated than before, but it’s hard to know whether the new shops (e.g. Joe Fresh) are gaining any traction. But Mr. Ullman (or his eventual successor) has a big task in front of him, starting with the need to drive sales volume. As I’ve pointed out repeatedly, the collapse of JCP’s sales in the last year made the rest of the operating model (margins and profits) unsustainable.

Whether Mike Ullman is the right man for the urgent job ahead of him remains to be seen. He is likely to bring some needed stability to the organization (and the vendor community) but did not move JCP forward during his last tenure as CEO. In the meantime, Ron Johnson’s short stint at JCP should provide cautionary lessons about the need to test new strategies and the dangers of a passive board being steered by an “activist” member.

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