JCPenney turning the page
After surviving some very tumultuous times, between their previous CEO enduring a 96% pay cut, and their law suit with Macy’s, JCPenney is looking to turn their financial luck around. After removing their CEO, Ron Johnson, from office eighteen months ago, they have spent much of their time trying to maneuver their way back to the top.
During this struggle they have been searching for a long-term replacement for interim CEO, Myron Ullman. It seems they have finally found the right executive to fill the role. Marvin Ellison will take over as President and CEO designee on November 1 and will officially become head of the company on August 1, 2015.
Why Ellison? Ellison assisted Home Depot in clawing its way back from two years of slumping sales (alongside the company’s CEO Frank Black), a result JCPenney would no doubt love to simulate. Ellison joined Home Depot in 2002, after fifteen years with Target Corporation. He has been in charge of Home Depot’s U.S. chain stores since 2008.
“Ellison has a successful track record of simplifying store operations, improving customer service, and … is widely known for being a great leader and motivator,” BMO Capital Markets analyst Wayne Hood wrote in a note.
JCPenney takes a step in the right direction
Ellison, without doubt, faces some big challenges as he takes over the company’s operations. JCPenney has lost money for three straight years, cut its third-quarter same-store sales forecast due to a “difficult retail environment” and left some analysts under-whelmed by its plan for revamping stores. They unveiled their plan to generating $2 billion in incremental sales growth over three years, including a renewed focus on its private label brands, and bolstering home goods and online sales.
While Ellison was highly successful at bringing Home Depot back from a slump, only time will tell whether or not this experience is transferable to selling fashion and home goods. JCPenney has made a good start with selecting Ellison. Their current interim CEO, will remain in place as executive chairman for a year after Ellison takes over.