JC Penney CEO Ron Johnson Out

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Ron Johnson, chief executive officer of J.C. Penny walks to State Supreme court in New York, U.S., on Friday, March 1, 2013. Photographer: Jin Lee/Bloomberg *** Local Caption *** Ron Johnson
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Ron Johnson's disastrous tenure with J.C. Penney (JCP) has come to an end: The company has confirmed a CNBC report that Johnson is out as CEO of the floundering retailer. J.C Penney says in a press release that former CEO Myron E. Ullman III will be taking over as chief executive.

Johnson, who formerly headed Apple's wildly successful retail operations, was brought on by J.C. Penney in November 2011 in a bid to boost lagging sales, and he quickly made a number of radical changes to the century-old retailer.

The everpresent sales and coupons were scrapped in favor of a "fair and square pricing" scheme. He brought in fresh new apparel lines and used a "store-in-store" concept to turn the sales floor into a collection of branded boutiques. He armed salespeople with mobile checkout devices, another Apple Store innovation. And he touted the changes with major ad buys, including spots with celebrity spokeswoman Ellen DeGeneres.
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But the changes were rejected by many J.C. Penney shoppers. The pricing scheme was abandoned after a year, with Johnson acknowledging that it was a "big mistake." We've heard from dozens of former J.C. Penney customers who said they no longer like the clothes they find at the store. And one sales associate told us that the mobile checkout devices frequently fail and make things less convenient for customers.

The company went from bad to worse as Johnson's grand experiment played out. Sales dropped a whopping 25 percent in his first year as CEO. Same-store sales were down 32 percent in the fourth quarter. As the share price dropped like a rock -- it's lost more than half its value in the last year -- big investors fled for the exits. And while Johnson's strategy had its defenders, the company was burning through a whole lot of cash making it a reality.

Calls for Johnson's ouster grew ever louder as quarter after quarter of dismal results rolled in, and at the beginning of the year we named him one of the CEOs most likely to lose their jobs in 2013. That prediction -- which we were by no means alone in making -- has now come true.

J.C. Penney stock is already up in after-hours trading on the news of Johnson's firing.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

The 10 Oddball Quotes From JC Penney's Fired CEO
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JC Penney CEO Ron Johnson Out

"The first and most encouraging thing to me is I am completely convinced that our transformation is on track. We are making extraordinary progress in everything we're doing."

"In haircuts, it's pretty incredible. Today we will cut on our tenth day of this effort to help Americans look better, help the kids look better. We'll do our 500,000th haircut, free haircut. And today customers will book their millionth appointment during the month of August to get a haircut.

"We're reducing the money on television. We'll still run television and we're investing heavily in the traditional traffic driving median, so be in the newspaper and we think that's going to be good."

"We're going to go paperless. ... Imagine a retail store without any paper except the signs, because everything will be done digitally through iPods and iPads and those are our priorities and those are all priorities within the next 12 to 18 months."

"Well, for the first 10 days with our new marketing, our traffic is down 7% to last year, which is a dramatic improvement."

"We're inspired by Selfridges. Selfridges is the leading department store in the world. You ask any retailer what's the number one department store? They will all say Selfridges."

"It's a place to refresh and we're going to have coffee bars and juice bars and place to get food, that's 25-square feet of space, but by putting out a few tables that have no cost, where we used to have cash wraps, no one has to leave the store if they want to refresh, they can grab a cup of coffee while someone shops and continue to stay in the store and continue to shop."

"We've rolled out Wi-Fi, but we really don't have a lot of use for it."

"What happens in a big mall of a 1 million square feet, about 600,000 square feet goes to the anchors and the common area which leaves about 400,000 square feet for the stores and the stores average 3,000 to 4,000 square feet. So, you run the math, you have about 100 to 120 stores in a typical mall we're in. We'll have just as many shops with inside JCPenney and that's what we call it a specialty department store. It's like a mall within a mall.

"Yeah, we're very anxious to communicate our pricing to our customer and we have failed at that, right? They were confused. Now, we have a pricing strategy that they understand. We have done focused groups around the country over the last 30 days with our new pricing strategy and they all say, we get it, whereas before, they were confused."

"At Apple our stores were busy when we only had Macs. Then we added the iPod; they got busier. We added the iPhone; they got busier yet. We added the iPad, and they got busier. The same thing will happen here. Next spring it's Joe Fresh, Martha Stewart, all our new partners. It will be just like Apple: boom, boom, boom."

As analyst Bill Dreher of Newedge USA told Johnson on the call, "I want to applaud you for creating one of the most exciting stories in retail write-down."

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