There’s panic in the boardroom at JC Penney (JCP).
If sales don’t turn around soon, directors of the beleaguered department-store chain will consider ousting CEO Ron Johnson, or even selling the company, according to a Wall Street Journal report.
Shares of JC Penney have dropped 29% since Johnson’s disastrous fourth-quarter earnings call last Wednesday. They now trade at their lowest levels since March 2009, in the midst of the recession, even as the Dow Jones Industrial Average hit a new high Tuesday, as seen in a stock chart:
JC Penney’s sales fell $4.3 billion last year, and the company is clutching at its dwindling cash and short term investments, as Ycharts reported:
Johnson earned his hotshot reputation running Apple’s (AAPL) retail stores, but his experience building glitzy showrooms for high-margin products hasn’t translated to the world of $18 polo shirts and $10 towels.
His tenure has divided Penney’s top investors. Bill Ackman of Pershing Square Capital Management LP, JC Penney’s largest shareholder, championed Johnson’s hiring and has remained a public supporter through his annus horribilis.
Meanwhile, Vornado Realty Trust—the second-largest shareholder—on Monday moved to unload about 10 million shares, or more than 40% of its stake in JC Penney.
From the Wall Street Journal story, it sounds like the board will give Johnson about six months. He has to hope that new apparel brand Joe Fresh, improved housewares, and the revival of discounts (and Penney coupons!) will lure back lost customers.
But the first half of the year is a slow time for retailers, lacking the splashy ad campaigns that accompany the back-to-school and holiday seasons. The calendar is working against Johnson—and unless JC Penney recovers, pronto, soon he may not be working at all.
Amy Merrick, a contributing editor at YCharts, is a former staff reporter for the Wall Street Journal, where she spent 11 years writing about the Midwest economy, state and municipal finances, and the retail and banking industries. Her work has been published in the Poynter Institute’s Best Newspaper Writing series. She can be reached at firstname.lastname@example.org.
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