J.C. Penney Co. Inc. investors — already an ornery bunch — were uninspired by the return of Myron “Mike” Ullman 3rd as chief executive officer.

This story first appeared in the April 10, 2013 issue of WWD. Subscribe Today.

Shares of Penney’s fell 12.2 percent to $13.93 Tuesday, leaving the department store with a market capitalization of $3.06 billion. The stock price had already been cut in half during the 17-month tenure of former ceo Ron Johnson, which abruptly ended Monday.

Wall Street analysts said Ullman’s relationships with vendors and understanding of Penney’s from his nearly seven years at the helm, before Johnson succeeded him, would help him stabilize the business.

But there’s some serious work to be done and it remains to be seen how long Ullman, who has no employment contract, will stay around and how much of Johnson’s strategy he will retain if he does.

Citi analyst Deborah Weinswig said Ullman would work to bring back department store talent to the organization, stabilize sales as well as worker morale, invigorate the Internet business and look to conserve capital.

“The big question that remains is: How long will it take to fix the business and how much will it cost?” Weinswig said. “Any course-correcting strategy will likely be tackled in pieces and over a period of several quarters. We think pricing and promotions will be the first areas to be fixed, and we expect a return to a high-low promotional strategy and stepped up advertising.”

Deutsche Bank analyst Paul Trussell said Ullman would “look to quickly assess what is salvageable over the next six [to] 12 months and make a recommendation to the board on the next ceo or for an alternative strategic option — via real estate or outright sale.”

Trussell said concerns over the company’s access to cash, or liquidity, would now take center stage given its recent losses and expenditures to remodel stores.

Kimberly Greenberger, a Morgan Stanley analyst, also said investors would probably continue to worry over the state of Penney’s balance sheet, but that Ullman’s return was a positive step.

Even so, Greenberger said the chain faces steep challenges.

“[Penney’s] struggles to drive sales with a concentration of private label brands with little to no meaning in today’s market,” she said. “We are convinced [Penney’s] needs a compelling way forward — but what that is remains to be seen. Johnson’s path of aspiring to a new shopper did not work, but [Penney’s] struggled to stabilize sales before Johnson’s arrival.”