Can Returning CEO Ullman Revive Penney's Fortunes?

jcpenney ceo retailer revival mike ullmanNEW YORK -- The return of the old guard at J.C. Penney have sent shares higher this week, even with major U.S. indexes suffering one of the worst downturns this year.

J.C. Penney brought back former CEO Mike Ullman to lead the company last week and he has already rehired one of his former executives forced out under Ron Johnson.

Johnson, the former Apple Inc. (AAPL) executive, was ousted himself last week after a disastrous 17 months at the helm.

The familiar faces have received a positive response on Wall Street, which has driven the stock up nearly 4 percent this week even as the S&P 500 slumped 3 percent.

At least one analyst that follows the company sees a precedent for Ullman's second act.

Citigroup's Deborah Weinswig said that bringing back old-hands worked successfully for BJ's Wholesale Club in 2007, when Herb Zarkin as put back in the CEO's chair.

Zarkin rehired three key members of his former team to run merchandising, marketing and store operations. Over the next 12 months, revenue at comparable stores rose 3.7 percent, compared with the modest 1.2 percent increase in the prior-year period.


One of Ullman's first actions was to rehire Ken Mangone as executive vice president of product development, design and sourcing. He had left in December 2012. Nick Wooster, fashion blogger and a former executive at luxury stores such as Neiman Marcus who had taken on his role, is now out. Penney also announced this week that two other Johnson hires -- Michael Kramer, chief operating officer, and Ken Walker, chief talent officer -- are now gone.

Penney's shares are still down 65 percent since early last year but investors appear to embrace an old familiarity.

Weinswig points out that Ullman had a deep bench that he could exploit.

"As of now, it's a two-man band, but there are other former JCP executives available who could come to work for their former band leader," Weinswig said.

Weinswig believes the merchandising, planning and allocation and store organization remains in good shape.

Liz Sweney, Penney's chief merchandising officer and the head merchants in women's, accessories, men's and home were all with Penney during Ullman's previous tenure. But she says the areas of marketing, finance, human resources and operations are lacking talent.

"We further suspect that there could be additional vacancies at lower levels of the organization, which JCP will need to fill," Weinswig wrote. She says of utmost importance is finding a president or chief operating officer to serve as Ullman's right hand man.

J.C. Penney Co. (JCP), based in Plano, Texas, is in a cash crunch and is exploring ways to bolster its cash reserves.

Johnson had planned to reinvent the company by getting rid of coupons, bringing in new brands and replacing racks of clothing with mini boutiques.

But the pace at which Penney's loyal shoppers abandoned the store exceeded any influx of consumers that it had hoped to attract with the new strategy.

Shares edged up 10 cents to $15.26 in Friday trading, continuing a rebound from multi-year lows, reached last week.


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cnmbigb

I am a 76 yr old. I once bought all my clothes at Pennys. However over the years, JCP kept discontinuing all the brands I liked, the final straw being cabin Creek and Briggs New York . Maybe you should look back at the time when Penny was doing well and see what was working. I would go back. What happened to Hunt Club?

April 22 2013 at 1:18 PM Report abuse rate up rate down Reply
bfash

JCP is going the way of the Dodo(Woolworths) !

April 22 2013 at 10:23 AM Report abuse rate up rate down Reply
natezim

Ullman certainly has the talent to reverse Penny's slump. It depends on the additional retail talent he brings in and the restructuring of Penny's financial picture.

April 22 2013 at 10:14 AM Report abuse rate up rate down Reply
deerpal

Mr Ullman ... You have not lost your core shoppers... We are still here... Waiting to shop at the "Old JC Penney's" ... But move fast...every day you lose more of your old loyal shoppers... !! Slash the prices of all that teeny bopper "carp" that Johnson brought in (teenyboppers aren't loyal to Penny's...but Johnson should have known that) ... Bring back the tops, pants, skirts, dresses, etc that women over 30 can wear in public... We miss our old Penny's so much ! Get your stores stocked...then put on a humungous "Grand Reopening Sale at the Old JC Penney's" !! Need more ideas ? This 74 year old lady could come up with a lot better ideas than Mr Johnson...and you wouldn't even have to pay me millions of dollars to go away... LOL !!

April 21 2013 at 10:33 PM Report abuse +2 rate up rate down Reply
1 reply to deerpal's comment
tony

Buy AMERICAN.

April 22 2013 at 12:50 AM Report abuse rate up rate down Reply
mike at home

years ago Penny had lot of items from radios tvs etc now just a few they need to first hire sales people who can answer customers questions then business will pick up

April 21 2013 at 10:29 PM Report abuse rate up rate down Reply
fritzcalkins

I knew something was wrong at Penney's when I saw that, on Ron Johnson's orders, all of the men's pants had a zipper in the rear.

April 21 2013 at 9:23 PM Report abuse rate up rate down Reply
rockeroll68

Have you seen the polished concrete floors? Looks like an outlet store. My local store is still remodeling and I got a peek at some of it that's almost finished. Not all bad but that concrete floor just says cheap to me. Gonna be interesting to see what changes Ullman will make and what difference it may or may not make. People didn't stop shopping; people found new places to shop and getting them back will be the ultimate challenge.

April 21 2013 at 8:26 PM Report abuse +2 rate up rate down Reply
rick

When you advertise put the actual price not percent off. I won't buy anything unless I know the Price. this is what ruint JCP

April 21 2013 at 7:45 PM Report abuse rate up rate down Reply
mr41005

Went to Penney's today. First in a long time. They need to get some merchandise in the store. Looks like a going out of business sale. Only half full

April 21 2013 at 7:16 PM Report abuse +1 rate up rate down Reply
stevessports

just go back to the basics of the store the way it was before, shoppers need your help in this hard economy not your gimmicks!!!!! Get rid of the upscale boutique look and go back to what felt comfortable!!! The customers will come back!!

April 21 2013 at 7:05 PM Report abuse +2 rate up rate down Reply
1 reply to stevessports's comment
tony

& sell AMERICAN, you commy reds.

April 22 2013 at 12:53 AM Report abuse -3 rate up rate down Reply