Struggling retail department store J.C. Penney (JCP) saw its shares jump over 5.3 percent on Tuesday, trading for as much as $15.85, for one of two reasons: rumors that the company’s CEO Ron Johnson, who has overseen a disastrous attempt to overhaul the company, would be forced to resign, or the statement the company released shortly afterwards stating that no such resignation would be forthcoming.
Company spokesman Joseph Thomas was quoted as saying, “Ron Johnson is not quitting or resigning from J.C. Penney and he has no plans to do so…The rumors are false”.
The denial of the rumors comes on the heels of a rough year for Johnson, whose attempts to remake the company began in earnest at the beginning of 2012, and involved the fateful move of eliminating the company’s massively popular sales and bargain shopping programs, alienating a larger than expected portion of its customer base.
The fourth quarter results alone were staggering, with the company losing $552 million, a whopping $2.51 per share, in a year during which the company’s losses totaled $958 million, or $4.49 per share, all of which is blamed squarely on Johnson’s removal of the company’s popular bargain programs. Furthermore, the promotions that are being brought back to stem the losses will not be returning in their original form, but will focus mostly on the company’s private label products and those of brands who choose to participate.
Other setbacks for Johnson have occurred in the last week in the form of Vornado Realty Trust attempting to get rid of 40 percent of its 10.6 percent ownership in the company, as well as an appearance by former company CEO All Questrom in an interview on CNBC during which he stated unequivocally that the company’s board should get rid of Johnson. As well, J.C. Penney’s credit rating was recently downgraded by the S&P.
Johnson, who has been credited for his work with Apple (AAPL), primarily as the designer of that company’s now ubiquitous storefronts, as well as his work for Target (TGT), does at least have the solace of being backed by another of JCP’s board members, the hardly insignificant Bill Ackman. Ackman is one of Johnson’s biggest supporters, and has said that he sees what Ron Johnson is trying to do as necessitating three years.
Considering the company’s shocking numbers over the last year since Johnson assumed the helm, however, it is conceivable that the rest of the board may not agree.