BY ANNE D’INNOCENZIO and CANDICE CHOI
NEW YORK — J.C. Penney’s board of directors has ousted CEO Ron Johnson after only 16 months on the job as a risky turnaround strategy backfired and led to massive losses and steep sales drops.
In a statement issued late Monday, the department store chain said that it has rehired Johnson’s predecessor Mike Ullman, 66, who was CEO of the department store chain for seven years until November 2011.
The announcement comes as a growing chorus of critics including a former Penney CEO Allen Questrom called for his resignation as they lost faith in turnaround strategy. Penney reported dismal fourth-quarter results in late February that capped the first full year of a transformation plan where Penney amassed nearly a billion dollars in losses and its revenue tumbled almost 25 percent to $12.98 billion.
Under Johnson, 54, Penney embarked upon a strategy that included ditching coupons and most of its sales events in favor of everyday low prices, bringing in hipper designer brands such as Betsy Johnson and remaking outdated stores by installing specialty shops devoted to brands like Joe Fresh and Levi’s to replace rows of clothing racks. Johnson’s goal was to reinvent Penney’s business into a hip place to shop in a bid to attract younger, wealthier shoppers. But since Johnson, the mastermind behind Apple’s stores, rolled out his plan, once loyal customers have strayed from the 1,100-store chain. It hasn’t been able to attract new shoppers to replace them.
In a vote of confidence, investors drove Penney’s shares up 24 percent to $43 after Johnson announced his vision in late January 2012. But as Johnson’s plans unraveled, Penney’s stock lost more than 60 percent of its value. Meanwhile, credit rating agencies downgraded the company deeper into junk status. Johnson saw his 2012 compensation package plummet nearly 97 percent to about $1.9 million without a sizeable stock award he got last year and no bonuses, according to a filing last week.