J.C. Penney ousts CEO, Mike Ullman returns

Mon Apr 8, 2013 7:48pm EDT
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By Phil Wahba

(Reuters) - Attention J.C. Penney (JCP.N: Quote) shoppers: Meet the new boss. Same as the old boss.

The struggling department store chain parted ways with Chief Executive Ron Johnson, who failed to win over shoppers and investors with his everyday-low-price strategy, and rehired former CEO Mike Ullman to revive the company.

Shares in J.C. Penney rose nearly 11 percent in afterhours trade after a CNBC report that Johnson was out, but then fell 7 percent after the company disclosed full details of the move, including Ullman's return.

William Frohnhoefer, an analyst at BTIG, said that while "certain investors had beaten the drum saying that a change was needed and Johnson wasn't the guy," he believed Ullman would not please the company's critics.

"Investors are concerned about Ullman," Frohnhoefer said, adding that Penney's sales notched "a decline, on a relative basis to other retailers, while he was at the helm."

Johnson, former chief of Apple's retail unit, tried to turn around Penney by revamping the department stores and replacing its traditional coupons and sales events with everyday low prices. But sales plunged 25 percent last year, and the company must now try to woo back shoppers it lost.

Johnson's ouster had been rumored for months, but Ullman's return came as something of a shock, considering how he had been publicly condemned by Penney's largest shareholder, hedge fund manager Bill Ackman.

In a May 2012 presentation, Ackman's Pershing Square called Penney "chronically mismanaged" and noted the stock's declines during Ullman's tenure. Its shares fell about 15 percent while he was CEO from 2005 to 2011. Still, when Ullman left, the share price was double the current price.   Continued...

Ron Johnson testifies in New York state Supreme Court in Manhattan March 1, 2013. REUTERS/Thomas Iannaccone/Pool