In a stirring development at J.C. Penney Co. Inc., Ron Johnson, the force behind Apple’s phenomenal retail rollout, will become the department store chain’s new chief executive officer on Nov. 1.
Johnson will succeed Myron E. “Mike” Ullman 3rd as ceo, while Ullman will remain at Penney’s as executive chairman. Johnson will also join Penney’s board on Aug. 1.
Wall Street reacted positively to the news of the top-level change and on Tuesday pushed Penney’s up $5.26, or 17.5 percent, to $35.37 on volume of more than 47 million shares, over 12 times the daily average.
Johnson, 52, has served for 11 years as senior vice president of retail at Apple Inc., where he orchestrated the brand’s fast-paced, innovative and highly productive retail strategy from its inception in 2001 to more than 300 stores currently in the U.S. and abroad. He’s got another 30 Apple store openings ahead of him over the next three months, including the first in Hong Kong, and a commitment to help Apple transition some new leadership in light of his departure.
As for why Johnson would leave one of the hottest companies in the world to join the midtier Penney’s, sources cited the appeal of running a very large enterprise, with Penney’s close to $18 billion in sales though still under prerecession volumes, with potential for growth and for elevating the image to attract younger customers. Johnson is also expected to drive Penney’s Web presence, introduce products and get the Penney’s team to think differently. Even more so, Johnson was lured by the prospect of reinventing another slice of retail, just as he did with the technology sector.
“This is a massive undertaking for Ron,” said someone close to him. “It’s one hell of a difficult job. It’s a hugely competitive market and there are very few brands out there that aren’t being discounted left and right. This job requires supercreativity, brilliant merchandising and a lot of blocking and tackling.”
Two major investors, William Ackman of Pershing Square Capital Management and Steven Roth of Vornado Realty Trust, have been pushing changes at the retailer and for Johnson to sign on, but Ullman said Tuesday in an interview that three or four years ago, around the time that his chief of merchandising and second-in-command Ken Hicks left the business to run Foot Locker Inc., he tried to recruit Johnson and has had his eye on him since.
“I knew of Ron’s success, his focus on innovation, creativity and reinvention,” Ullman told WWD. “But it wasn’t the right time for him. He was very passionate about Apple, which is probably the number-one retailer at this point.”
Ullman also noted that he joined Penney’s in December 2004 when he was 58, and implied that succession was something to be dealt with in the not-too-distant future. Ullman has been managing with a disability that has him often using a Segway scooter to get around.
He did take credit for building “a new foundation” at Penney’s, and cited what’s been an aggressive rollout of merchandise initiatives, among them the addition of Sephora; Call It Spring shoes, which are made by Aldo; MNG by Mango; Nicole by Nicole Miller; American Living, which is designed by Polo Ralph Lauren Corp.; Olsenboye by the Olsen twins, and Modern Bride jewelry. There’s also been a buildup of private labels, including a.n.a., to add a contemporary flavor to the assortment.
“These are things that have attracted middle-income consumers even during the recession,” Ullman said. Going forward, “the biggest opportunity is to have more visits from existing customers and visits from those that wouldn’t have considered us before. There’s lots of white space to win.”
Johnson’s arrival, considering his track record at Apple and, prior to that, at Target Corp., where he held senior merchandising roles, signals major changes ahead for Penney’s. Asked if Penney’s, which deals in selling soft goods, could start carrying Apple products, Johnson replied: “I don’t want to comment on any future plans for Penney’s or Apple.”
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