J. C. Penney faces the challenge of convincing its suppliers that it has a viable plan to recover from its financial difficulties.
JC Penny has another bad Quarter
J. C. Penney’s chief executive admitted that he had made “big mistakes” with his turnaround efforts, he introduced his ambitious new strategy that would redefine department store shopping experience by having stores-within-a-store (centered on building 100 boutique-style shops inside each store by 2015), suggested then that Penney needed a little bit of Apple’s magic and quest to “be the favorite store for everyone”. Under his leadership, the retailer had gotten some areas wrong, including marketing, stepping away from sales and promotions - an assessment that customers wanted simple pricing without constant sales- and adhere to a three-tiered pricing plan. This decision lead to: $1 billion loss, a $4 billion decline in revenue, a stock price that lost half its value by shares dropping 44% and more than 20,000 layoffs. This is the worst performance by a major retailer in this century, three times higher than JC Penney’s decline after the Great Recession. The company has since abandoned most of Johnson's efforts in an attempt to bring old customers back. I chose this article because it brings to light the importance’s of leadership and the decisions they make. In this particular case we see mistakes that were caused by poor decision making and the potential risk to a firm’s financial health.
Change in Leadership
JC Penny said on Apr. 8 that CEO Ron Johnson was leaving the company and would be replaced on an interim basis by former CEO Mike Ullman. Mr. Ullman communicated how he plans to unwind Mr. Johnson’s initiatives and in-steal his own.
Mr. Ullman first big move was to borrow $850 million from a credit line that makes a total of $1.85 billion available to the company. In addition to tapping its credit line, upper management is looking into other means to raise money. Having...