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JC Penney falls in premarket as new CEO named

NEW YORK (AP) -- Shares of J.C. Penney Co. dropped in premarket trading Tuesday following the chain's ouster of CEO Ron Johnson after only 17 months on the job.

Late Monday, J.C. Penney announced that it had rehired Johnson's predecessor, Mike Ullman, who was CEO of the department store operator for seven years until November 2011.

The announcement came as a growing chorus of critics including a former Penney CEO, Allen Questrom, called for Johnson's resignation as they lost faith in an aggressive overhaul that included getting rid of most discounts in favor of everyday low prices and bringing in new brands.

Deborah Weinswig of Citi Investment Research said in a client note that she felt the company's "severe underperformance compelled the board to make a CEO change to stabilize the business."

The analyst called Ullman a strong choice, saying he's one of the top talents available in retail and is already familiar with Penney's business.

Weinswig said some of Ullman's priorities should include stabilizing employee morale and sales, bringing on top talent, rebuilding the company's online sales and conserving capital.

The analyst maintained a "Neutral" rating.

Penney said that it does not comment on analyst reports.

The company's stock fell $1.24, or 7.8 percent, to $14.63 about 30 minutes before the market open.