J.C. Penney Co. to revive.
The mini boutiques with which Mr. Johnson planned to pepper Penney are likely out the door, analysts say. And reestablishing relationships with vendors is probably a priority.
![Penney, Need Stability Path Wall OB-WZ585_0406ul_D_20130409102632.jpg]()
Mike Ullman, chairman and chief executive of J.C. Penney, visits a company store in New York.
Investor concern remains high: In early trading Tuesday, Penney stock was down about 10%.
Mr. Ullman is likely to take a close look at the company's biggest transformation project: its home department. The multi-million dollar project includes bringing in fresh merchandise and new stagings.
Mr. Ullman's stamp isn't likely to be too heavy handed at the start.
"One thing they can't do is swing the pendulum back to the way things were under Mr. Ullman because that wasn't working either," said Kathy Gersch, co-founder of Kotter International, a leadership consulting firm. "As a management team, they have to take a look at who their customer is and what they want and move in that direction. And that can't be Ron Johnson's or Mr. Ullman's."
"Perhaps Mr. Ullman can take the best ideas from Mr. Johnson's regime, such as the specialty shops—but where will the cash come from to execute it—and abandon the worst ideas, such as eliminating discounts and clogging the aisles with gelato stands, and return the company to its former glory," said Carol Levenson, director of research at Gimme Credit, a corporate bond research firm.
There are also personnel issues that will have to be dealt with. For instance, there has been no word of the fate of Chief Financial Officer Kenneth Hannah, who Mr. Johnson brought in, or other of his top management hires that remain.
Mr. Ullman "is coming in, but he's not coming back to the same leadership team he had when he left," given Mr. Johnson having brought in his own people, said Ms. Gersch. "Mike Ullman needs to pull that team together because they have a short period to get things back in order."
Mr. Ullman has to first bring Stability to J.C. Penney and then get it moving forward.
The changing of the guard "raises near-term risk as the company has to develop yet another strategy to restore revenue growth and profitability," said Wayne Hood, retail analyst at BMO Capital Markets. "Additionally, the move is likely to create uncertainty among JCP's suppliers as the company's strategy further evolves."
Mr. Hood expects pressure on the stock given no clear picture of sales and earnings, as well as liquidity constraints given Penney has been spending so much money on its transformation. The stock may also be pressured by [Dear Guest/Member you can't see link before click here to register]'s Pershing Square Capital Management and [Dear Guest/Member you can't see link before click here to register] pulling out, analysts say. The two groups were the champions of bringing in Mr. Johnson just under a year-and-a-half ago. Mr. Johnson replaced Mr. Ullman, who had been chief executive since 2004.
The mini boutiques with which Mr. Johnson planned to pepper Penney are likely out the door, analysts say. And reestablishing relationships with vendors is probably a priority.
Mike Ullman, chairman and chief executive of J.C. Penney, visits a company store in New York.
Investor concern remains high: In early trading Tuesday, Penney stock was down about 10%.
Mr. Ullman is likely to take a close look at the company's biggest transformation project: its home department. The multi-million dollar project includes bringing in fresh merchandise and new stagings.
Mr. Ullman's stamp isn't likely to be too heavy handed at the start.
"One thing they can't do is swing the pendulum back to the way things were under Mr. Ullman because that wasn't working either," said Kathy Gersch, co-founder of Kotter International, a leadership consulting firm. "As a management team, they have to take a look at who their customer is and what they want and move in that direction. And that can't be Ron Johnson's or Mr. Ullman's."
"Perhaps Mr. Ullman can take the best ideas from Mr. Johnson's regime, such as the specialty shops—but where will the cash come from to execute it—and abandon the worst ideas, such as eliminating discounts and clogging the aisles with gelato stands, and return the company to its former glory," said Carol Levenson, director of research at Gimme Credit, a corporate bond research firm.
There are also personnel issues that will have to be dealt with. For instance, there has been no word of the fate of Chief Financial Officer Kenneth Hannah, who Mr. Johnson brought in, or other of his top management hires that remain.
Mr. Ullman "is coming in, but he's not coming back to the same leadership team he had when he left," given Mr. Johnson having brought in his own people, said Ms. Gersch. "Mike Ullman needs to pull that team together because they have a short period to get things back in order."
Mr. Ullman has to first bring Stability to J.C. Penney and then get it moving forward.
The changing of the guard "raises near-term risk as the company has to develop yet another strategy to restore revenue growth and profitability," said Wayne Hood, retail analyst at BMO Capital Markets. "Additionally, the move is likely to create uncertainty among JCP's suppliers as the company's strategy further evolves."
Mr. Hood expects pressure on the stock given no clear picture of sales and earnings, as well as liquidity constraints given Penney has been spending so much money on its transformation. The stock may also be pressured by [Dear Guest/Member you can't see link before click here to register]'s Pershing Square Capital Management and [Dear Guest/Member you can't see link before click here to register] pulling out, analysts say. The two groups were the champions of bringing in Mr. Johnson just under a year-and-a-half ago. Mr. Johnson replaced Mr. Ullman, who had been chief executive since 2004.