JC Penney CEO Ron Johnson is Let Go While Former Head Mike Ullman is Hired Back

JC Penney, the clothing department store chain that has been in a retail sales rut is saying goodbye to Chief Executive Ron Johnson. It has been rumored for many months that Johnson would be sacked by the Board of Directors. To lead the company, JC Penney executives hired back Myron Ullman, a former Chief Executive Officer of the company who served before Johnson. Ullman has also served as a Macy executive.

JC Penney Chairperson Thomas Engibous issued a statement to the media saying that the Board of Directors wanted to thank Johnson for his service to the company.

Big mistakes

JC Penney shareholder Bill Ackman claims that the former CEO made a number of huge mistakes that was nearly disastrous for the company. When Ron Johnson became in charge of the department store chain he discontinued the sales events and started doing without the regular coupons. Instead everyday low prices were instituted at the more than one thousand JC Penney retail stores nationwide. Some of the other features that Johnson added to the stores included Wi-Fi access and he also set-up a checkout system via smartphones.

Apple success

Ron Johnson was formerly head of the retail unit of Apple where he served for more than ten years. Johnson was very successful at growing the company’s retail performance and he was instrumental in increasing sales. He was lauded as a strategist and a good manager during his service to Apple.

However, with JC Penney, Johnson’s fixed low-price scheme did not work at all and the shoppers and investors were slow in coming. In 2012, the store saw a 25% decrease in sales.

Critics: “Ullman is no better”

Right after news that Ron Johnson was leaving has been publicized JC Penney shares increased 11%. However, shares went down 7% when reports were out that Ullman was taking charge again. The largest shareholder of JC Penney, Bill Ackman, even condemned Ullman publicly, and that’s why the decision to bring Ullman back was a shock to many of those who knew about the company’s many difficulties in the past year and its chronic mismanagement.

Many analysts who disapproved of Johnson, saying he “was not the guy” are insisting that Ullman would not be a favorable choice either. The sales at JC Penney declined as well when Ullman was leading the company. Critics are saying that there is no one else who wants the position and that is the only reason why Ullman has been invited back. Others say that this move is a temporary fix more than anything.

Back to the old ways

In the hopes of bringing shoppers back the prime movers at JC Penney would be implementing the old pricing strategy. The first challenge they need to overcome is campaigning for customers to go the stores and shop like they used to. They are now campaigning to bring clients back.

The move to rehire Ullman is an advantageous one in the opinion of those who are for the decision. Ullman knows the organization and they say that this is the prime virtue of bringing him back.