J.C. Penney CEO leaving for Lowe's
- J.C. Penney CEO Marvin Ellison is leaving the department store retailer to take the chief executive spot at Lowe's, according to press releases from both companies. Penney said Ellison is stepping down from his post as the company's board chairman immediately and will stay on as a director and CEO through June 1.
- J.C. Penney Lead Independent Director Ronald Tysoe is stepping into the chairman spot and has created an "Office of the CEO" to run the company's operations until Penney brings in a permanent chief executive. The office is composed of Chief Financial Officer Jeff Davis, Chief Customer Officer Joe McFarland, Chief Information Officer Therace Risch and Executive Vice President of Supply Chain Mike Robbins, the company said in the release.
- Ellison, who before joining Penney served in various executive roles at Home Depot, will take over at Lowe's beginning July 2, succeeding Robert Niblock, who previously announced his retirement after 25 years with the retailer. Lead board director Marshall Larsen said in a statement that attracting Ellison was a "great win" for the company. "Marvin joins Lowe's at a critical inflection point as we work to enhance our competitive position and capitalize on solid project demand in an evolving consumer environment," Larsen said.
Ellison's departure marks the end of an important era at Penney and leaves a cloud of uncertainty hanging over the department store chain as it tries to turn itself around in a retail market that Ellison recently described as the worst the company has seen in 50 years.
Ellison, who had previously served in various executive roles at Home Depot, was brought in after the disastrous tenure of former Apple executive Ron Johnson. Johnson made a bold bet earlier in the decade on a simplified pricing scheme and new brand stores within Penney's locations, rolling the changes out across the company's fleet without testing them first. Customers did not react as hoped — in fact, they fled.
The company posted net losses of $795 million in 2012, $1.2 billion in 2013 (the year Johnson left) and $717 million in 2014. Comparable sales in 2012 fell a harrowing 25%. The next year, the company added more than $2.5 billion in debt to its books. Into the breach stepped Ellison, who had overseen Home Depot's stores and was known for a focus on operations and holding down costs. He took sole control of the CEO position in 2015, but much damage had already been done.
With Ellison at the helm, Penney has largely slowed the flow of sales and money out of the company. It even made a profit in 2016, which it followed up with a $116 million loss last year. Still, that represents significant improvement over the years before he took over.
But investors and other watchers of late have become jittery and skeptical about the strength and runway of the company's turnaround. Last fall, Ellison said the company would post losses in the third quarter as the retailer moved to clear its inventory of women's apparel, in an attempt to quickly catch up with shifting tastes ahead of the holidays.
In March, Penney said it had slashed 360 jobs at its home office and support teams following a fourth quarter that fell short of analyst estimates. Penney's first quarter 2018 numbers were worse, with top-line sales declines, comps that barely budged upward and a loss of $78 million — all of which fell short of estimates.
Ellison said earlier this month that apparel is still key to Penney's strategy, even as it has lost market share and beefed up other categories like beauty, toys and appliances, where the retailer has benefited from Sears' "donated" (to use Ellison's own term) share. Now, on top of the company's sector struggles, it has a leadership vacuum to plug, as Ellison leaves the troubled department store world to return to his roots in home improvement, which is in a far better position at the moment as the housing market remains strong.
Lowe's has long operated in the shadow of rival Home Depot, where Ellison built his reputation. Of late, Lowe's has been working on building its brand, improving the store experience including through technology and omnichannel capabilities, and giving its pro services a boost. Ellison said in a statement Tuesday that his goal with the company is to "deliver the most simple and seamless customer experiences as we execute with purpose and put the customer first in everything we do."
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