Is JCP’s Ron Johnson Sticking His Head in the Sand?
What has happened to J.C. Penny (NYSE:JCP) in the past year would leave many chief executives in despair. Investors have certainly given up on the retailer, selling off shares with increasing rapidity. As sales figures, gross margins, and cash flow figures worsened over the past 12 months, the company’s shares etched out an ever-downward path on the stock charts, dropping approximately 60 percent since Ron Johnson took over as CEO. Lowered investment ratings from analysts have rounded out the grim picture of J.C. Penny’s fortunes, as have credit-rating downgrades.
But Chief Executive Ron Johnson is not disheartened by his company’s increasingly dismal fortunes, nor does he have any desire to resign. And, oddly enough, this news seems to have given investors confidence; they bid up shares of the retailer close to 5 percent in morning trading on Tuesday.
While The Wall Street Journal reported last week that several of J.C. Penney’s board members, including billionaire hedge fund manager Bill Ackman, have considered removing him as CEO or selling the company if results do not improve, a spokesman for the retailer denied these speculations. “Ron Johnson is not quitting or resigning from J.C. Penney and he has no plans to do so,” said Joey Thomas in an e-mail sent to Barron’s on Tuesday. “The rumors are false.”
And, Johnson himself said that the company will “be much, much strong a year from now,” as if to agree to the board’s mandate. Speaking to guests at an opening party for a temporary J.C. Penney pop-up store on Melrose Avenue in Los Angeles, orchestrated to celebrate the company’s collaboration with the Canadian apparel brand Joe Fresh, Johnson expounded on this point. J.C. Penney’s tactics — which include the partnership with Joe Fresh — are what he called the “repositioning,” the “reinvention,” or the “transformation,” according to the Los Angeles Times. He still maintained that this push to turn the 1,100-store company into a “specialty department store” will provide “a reason for a lot of customers who haven’t been to JCP lately to come check it out.”