JC Penney Co’s newly tapped chief executive officer (CEO) has a big challenge ahead of him: The troubled chain is showing signs of improvement after racking up billions of US dollars in losses, but still has not figured out how to get shoppers back into its department stores.
Penney on Monday said that Marvin Ellison, a 30-year retail veteran and executive vice president of stores at Home Depot Inc, is scheduled to become its CEO in August next year.
Ellison is set to be the first black CEO in the company’s 112-year history.
Ellison succeeds Mike Ullman, a former Penney CEO who came out of retirement last year to take the helm again.
His mission was to stabilize the business following the ouster of Ron Johnson, a former Apple Inc executive who tried unsuccessfully to reinvent the beleaguered chain by getting rid of sales and some basic merchandise.
That led to billions of US dollars in losses of profit and sales.
The company’s profit losses — which have amounted to a total of US$3.16 billion in 11 of the last 12 quarters — have been slowing significantly under Ullman’s leadership.
However, the company is still in the red, and analysts say Ellison’s challenge is to fix the fundamental problems that caused Penney to lose customers in the first place.
They say the retailer does not have merchandise that sets it apart from rivals like Macy’s Inc and Hennes & Mauritz AB, known as H&M.
Its stores are drab and unexciting, and its Web site does not offer the selection and services that shoppers like.
“While bringing in a credible new CEO has some benefits, JC Penney’s customers are leaving the store,” said Michael Binetti, an analyst at UBS in a note to clients on Monday.
Penney is looking to Ellison, 49, to help right the ship.
Ellison spent 12 years with Home Depot and before that, 15 years at Target Corp.
He has expertise in store operations and logistics, but lacks experience in fashion.
Ellison, who also is set join JC Penney’s board, is scheduled to become president in November, before taking the CEO title next year.
At that time, Mike Ullman plans to become executive chairman of the board, serving for a year.
In the latest fiscal year that ended Feb. 1, Penney recorded a loss of US$1.39 billion, while revenue dropped 8.7 percent to US$11.86 billion.
Last week, Penney warned that its sales at stores open at least a year last month were weaker than expected.
It also cut its outlook for sales at established stores for the current quarter.
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