Picking Up the Pieces

 | Apr 09, 2013 | 8:11 AM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:


Elvis has officially left the building. After much recent speculation about how much longer CEO Ron Johnson would last with J.C. Penney (JCP) the market received the zinger press release after Monday's close: Ron is out.

The market cheered, but then the reality check set in. Mike Ullman, the former leader of JCP, is taking the reins back. The market weighed in and the verdict was that bringing back the old regime simply won't cut it. After all, Johnson burned almost $1 billion in cash to change the retailer's strategy, failed and then did a 180 back to the coupon hungry old ways. And now the old regime is back? What was the point of this exercise?

Here is the reality. Yes, Johnson admitted his failings, but a turnaround under the watch of a larger-than-life ego rarely succeeds. You see, Ron didn't believe in testing things. He also believed in surrounding himself with what I have referred to numerous times as "the circle of yes." Employees learned it was Ron's way or the highway. That is no way to lead a transformation

So, now, the market is looking at the old regime. Ullman is better than Johnson for a number of reasons. First, the circle of yes is broken. Second, vendors are probably more comfortable with the old regime vs. the new and, eventually, that will really matter (Cramer has pointed this out as well). Third, Ullman is the interim CEO. Who did you think the board would find to clean up this mess in the near term at a reasonable comp package?

The real question now centers on what to do with the JCP stores under construction. Johnson has sent the core customer packing and failed to get the new consumer knocking at the new shops. While new "shop in shops" look good, we are talking about turning over the consumer base. Johnson was right about one thing: Transformations take years. And thanks to the mess he created, JCP is running out of time.

Columnist Conversations

View Chart »  View in New Window » View Chart » 
Hug declines in Advance Auto Parts (AAP) and Dick's Sporting Goods (DKS) made for great chances to buy stock a...
Pepsi is trading at new all time highs today. The stock is up 0.7% and is taking out major resistance near the...
FIBOCALL: AAP down 22% "FIBOCALL: AAP opens much lower today. We took a look way back to see where support ...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.