J.C. Penney has canned another executive and replaced him with a member of the old guard. And the latest management shakeup could spell the end of the retailer's style revolution.
Earlier this month, CEO Ron Johnson was replaced by his predecessor, Myron Ullman. Now the man he appointed to overhaul the retailer's apparel collections, Nick Wooster, has also been given the boot and will reportedly be replaced by his own predecessor.
The New York Post reports that the menswear style icon has been fired as executive vice president of private brands, a position he has held since last April. As with Johnson, he will be replaced by the man who used to occupy his office -- in this case Ken Mangone, who left the company when Johnson first took over.
With Johnson and Wooster's departures, we may be seeing the beginning of the end for J.C. Penney's attempt to remake its image.
Under the two executives, it wasn't just coupons that disappeared: Loyal customers also saw the inexpensive, "basic" clothing collections disappear from shelves, to be replaced by stylish jeans bars and boutiques from brands like Joe Fresh. Dozens of disaffected shoppers told us that the new clothes, clearly directed at a younger generation, had driven them to take their business to competitors like Kohl's and Macy's.
Shortly before Johnson got the boot, J.C. Penney Co. (JCP) CFO Ken Hannah acknowledged the apparel disconnect, and said that older brands like St. John's Bay would soon make a comeback. Now that Wooster has been ousted as creative director, don't be shocked if that concession becomes a full-blown retreat. That might please some older customers, but it's tough news for the younger, style-conscious shoppers who had started to discover that J.C. Penney was transforming itself into a source of inexpensive, stylish clothing.
And investors don't seem too impressed, either: While the share price spiked on the news that Johnson was on his way out, it quickly dipped again when it was revealed that the old boss would be coming back. As bad as things were under Johnson, it's easy to forget that the company wasn't exactly thriving under old management. Bringing back the old guard and rolling back the big changes might right the ship temporarily, but in the long term it does nothing to address the company's underlying issues.
We don't know for sure that Mangone will completely reverse Wooster and Johnson's apparel strategy. But if you were thinking of heading down to J.C. Penney to check out the new styles, you might want to do so before it's too late.
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.
J.C. Penney: Out With the New, In With the Old
Ron Johnson's short tenure as J.C. Penney's (JCP) CEO will go down as one of the biggest flameouts in corporate America. The former Apple executive was hailed as a big thinker when he was hired by the ailing department store chain, but his radical moves ended up alienating shoppers, sent sales plunging, and left the company in even worse shape.
He lasted 17 months.
But Johnson isn't the only executive to be pushed out after failing to live up to big expectations. Here's a look at some of the other major ousters in recent times.
The Internet company Yahoo! (YHOO) hired technology veteran Bartz in 2009, with the goal of bringing in a no-nonsense leader who would develop a clear vision. Bartz shook up Yahoo's management and instituted a cost-cutting program that helped boost the company's earnings. But revenue failed to grow even as the online ad market expanded at a rapid clip.
Bartz, known for her very direct approach and sometimes-colorful language, stressed that a turnaround would take time and pleaded for patience from shareholders, pointing out that it took Steve Jobs years to revive Apple after his return in 1997.
But after more than 2½ years of financial lethargy, Yahoo ousted Bartz in 2011. The company's chairman fired her over the phone, according to an email Bartz sent from her iPad that was obtained by the All Things D technology blog at the time.
When HP (HPQ) hired Apotheker in November 2010, it was seen as an aggressive push by the company into the software business. But many analysts mocked the choice, considering that Apotheker had just been forced out of his previous job as CEO of German business software maker SAP AG following ill-timed price hikes and widespread employee dissatisfaction.
Apotheker was supposed to be a steady hand to steer HP out of a tumultuous time but his strategic decisions were drastic and did little to inspire confidence. He was doomed by disappointing earnings and a fumbled announcement that the company's personal computer division was for sale. Even as he struggled, Apotheker complained that HP suffered from years of under-investment by his predecessor, Mark Hurd.
Apotheker also was one of the chief backers of HP's acquisition of British software company Autonomy Corp. HP paid $10 billion for Autonomy, but later said it was deceived by improper accounting and overpaid.
Conaway had won many fans on Wall Street as the No. 2 executive at CVS (CVS), where he helped build the drugstore chain into an industry powerhouse. When he was hired by Kmart (SHLD) in 2000, Conaway inherited a company with a long list of entrenched problems, including outdated technology and drab stores.
Analysts say Conaway made strategic mistakes, such as trying to compete with Walmart on price and focusing on exceedingly cheap groceries rather than on its exclusive Martha Stewart brand. In early 2002, Kmart filed for Chapter 11 bankruptcy, and Conaway resigned soon after.
Conaway also faced accusations that he misled investors about Kmart's financial problems before the bankruptcy filing.
The bankruptcy led to Kmart coming under the control of Edward Lampert, a billionaire investor. Lampert later engineered the acquisition of Sears, Roebuck & Co., combining the companies into Sears Holding Corp.
Nardelli was hailed as an outsider who could help save the U.S. auto industry by private equity firm Cerberus Capital Management, which installed him as the head of Chrysler in August 2007. But Nardelli, who spent most of his career in the executive ranks at GE before leaving to run Home Depot, had no experience in the complex business of auto manufacturing, and it showed.
Instead of investing to improve Chrysler's substandard lineup, Nardelli focused on cutting jobs and closing plants. He alienated suppliers and dealers, who revolted when Chrysler announced plans to close dealerships and stopped financing leases. And he was gaffe-prone, at one point mistakenly telling Wisconsin's governor that an engine plant in his state would remain open.
By the time the financial crisis hit in the fall of 2008, Chrysler was in serious trouble. Nardelli testified before Congress and obtained loans to help the company survive, but it was too late. Chrysler filed for bankruptcy in April 2009. When Chrysler exited bankruptcy that June, Nardelli was out and Fiat CEO Sergio Marchionne took over.
Grocery store operator Supervalu brought in Herkert in 2009 with the hopes that the high-ranking former Walmart executive could spark a turnaround for its struggling fortunes. Supervalu (SVU), which was one of the country's biggest grocery store operators at the time, was struggling with growing competition at big-box retailers, drugstores and dollar stores.
Under his tenure, Herkert tried positioning Supervalu as a neighborhood store and emphasized low prices. But sales and profitability kept sliding and last summer, the company suspended its dividend and announced plans to potentially put itself up for sale. A few weeks later, Herkert was out.
In January, the company announced that it was selling five of its major chains and focusing on its Save-A-Lot discount stores and smaller regional chains.
Rollins joined Dell (DELL) in 1996 and held a variety of roles before becoming CEO in 2004, including chief operating officer, vice chairman and president of Dell Americas.
The company had been struggling with a market glut of low-cost, low-profit PCs and weaker-than-anticipated sales of its pricier, more lucrative desktops and notebooks. In 2006, it lost its No. 1 position in the industry to rival Hewlett-Packard Co. In addition to disappointing earnings, Dell had recalled more than 4 million potentially flammable notebook batteries made by Sony in August 2006. The company's accounting practices had come under federal scrutiny as well.
The key parallel between Rollins and Penney's Johnson may have been overpromising. Rollins took the reins of a company doing a little more than $40 billion a year in business and painted pictures of bumping that to $80 billion -- which Dell has still not approached.
Rollins stepped down in early 2007. Founder Michael Dell took the CEO job back.