Penney ousts Johnson as CEO for predecessor

After a dismal year in which sales fell After a dismal year in which sales fell 25 percent, J.C. Penney Co.’s Ron Johnson is being replaced by his predecessor. (April 1, 2013) Photo Credit: Bloomberg

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J.C. Penney Co. ousted chief executive Ron Johnson on Monday and reinstated his predecessor, Myron E. Ullman III, as the department-store chain worked to rebound from plunging revenues.

The changes were effective immediately, the Plano, Texas- based company said Monday in a statement. Ullman and J.C. Penney have yet to enter into an employment agreement, the company said in a separate filing with the Securities and Exchange Commission.

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The departure comes after a dismal first year on the job for Johnson, who arrived at J.C. Penney with great fanfare after helping create Apple Inc.'s network of stores. Johnson has been trying to transform most of J.C. Penney's locations into collections of boutiques and removing sales and coupons in favor of everyday low prices.

"He tried to change way too many things at the same time, ranging from management to the pricing structure to the shop-in-shop concept," said Howard Gross, managing director of the retail and fashion practice at executive search firm Boyden in New York. "All those things, even if done individually, would have been significant, but to hoist all those changes on the organization in one fell swoop was way too many changes at the same time."

Sales in the year ended Feb. 2 plunged 25 percent to $13 billion, the lowest since at least 1987. Ullman, 66, served as J.C. Penney's chairman and chief executive for about seven years before Johnson, 54, took over.

J.C. Penney shares fell 6.99 percent to $14.75 in after-hours trading, after earlier climbing as much as 13 percent on a CNBC report of Johnson's exit. The shares had dropped 50 percent from Nov. 1, 2011, the day Johnson started.

Johnson's ouster also represents a blow to hedge fund manager Bill Ackman, who recruited the executive from Apple. Ackman's New York-based Pershing Square Capital Management LP is J.C. Penney's largest shareholder, with 18 percent.

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