J.C. Penney stores currently appear be struggling along, almost without any significant go-to strategies for 2019 – the year that promises to be the make-or-break for the company. Some experts say that Penney’s current difficulties are the result of the mistakes of the past coming home to roost. Part of the problem at Penney’s lies in the fact that the company has had too many CEOs in too short a time span.
Ron Johnson, a former Apple executive, came in as CEO in 2011 and was replaced by Mike Ullman in 2013. Ullman was replaced by Marvin Ellison as CEO in July, 2015. During these many comings and goings, the company scaled back its discounts (something that had been keeping customers coming in to shop) and focused on appliances rather than apparel – a surprising move since Penney’s has never been viewed as a place to go to purchase appliances – I didn’t even know that they sold them – apparently they hadn’t since 1983. New CEO, Jill Soltau joined the company in October, 2018, when retail customers were spending freely in the booming economy. But Penney’s has recently announced a 3.5% decline during the past holiday season. The company’s response has been to announce that it would close more stores. In a November conference call with analysts, Soltau described her position as one in which she was still formulating her strategy for the company. (Typically, CEOs are hired on the basis of the strategy solutions that they can put forward at the point of hiring – it’s surprising that, this far into the job, the CEO is still formulating initial strategy efforts. One would, therefore, wonder about the quality of Penney’s board of directors – and at their apparent lack of hiring rigor for the CEO position.) Last week, just to make things even more obtuse at Penney’s, it was announced that a consultant was being hired to serve as “chief transformation officer” to develop and implement strategic changes – typically, this is what the CEO does. Therefore, what is it that the CEO will be doing while the “chief transformation officer” is trying to reform the company? There is a clear and distinct need to determine what the new strategies might be in order to keep the company going forward. During the past few years, the company had decided to pursue millennials as its core constituents, launching new apparel brands that were meant to compete with the trendier retailers – a wild-eyed strategy, for sure. And, to add even more concern and confusion to the mix, Penney’s is saddled with a $4.3 billion debt, the result of former CEO Ron Johnson’s failed overhaul during his tenure. So, as I say, Penney’s has clearly suffered (and apparently still is) from too many CEOs. With every new CEO, the company has been forced to portray itself as something different to the public – and as an analyst has recently commented, “There’s a risk that if you change your position so regularly, customers don’t know what you stand for anymore.” Very true – for individuals, as well as for companies. I’d suggest that Penney’s investors – whomever they might be – should step forward and take a close look at the company’s board of directors – that group doesn’t appear to have been functioning properly for the past decade. ALL THE MOVING PARTS – one of the five major elements of a corporation is its board of directors.