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As expected, there are an enormous number of articles out there about the situation in which JC Penney finds itself - having hired Ron Johnson, who helped to create the Apple Store, to reinvent the iconic but troubled retail chain, it fired him 17 months later because his efforts - especially going from a promotion/coupon pricing approach to EDLP - resulted in lower sales, massive losses and diminished traffic. They have replaced him with his predecessor, Myron E. Ullman III - who now finds himself running as company where many of his former underlings have moved on to other jobs, replaced by executives handpicked by Johnson, and having to deal with a strategy vastly different from the one he was pursuing a year and a half ago.

The JC Penney debacle will be the subject of case studies for years to come, but some of the stories immediately following Johnson's dismissal are particularly interesting.

• The New York Times writes that from the moment that Johnson arrived at JCP headquarters in Plano, Texas, "some there believed he would not last long ... He blew into Plano a star, a man who helped build the juggernaut Apple Stores. But his Silicon Valley ways — evident from a showy party in early 2012 that he threw to celebrate himself and his plans, replete with a light show, fake snow and flowing liquor — jangled from the start."

One excerpt: "No sooner had Mr. Johnson been named as chief executive in 2011 than he began poking fun at Penney’s way of doing business ... Mr. Johnson dismissed most of the top executives from Mr. Ullman’s reign and brought in his own team, largely from Apple and Abercrombie & Fitch. Mr. Johnson commuted from California, and employees said he was a hard worker, decisive and responsive to even late-night e-mails. But few of the top executives he had hired relocated to Texas, instead working there a few days a week, staying 'quarantined,' as a veteran put it. Penney hands used the acronym AAPLE to refer to the newcomers — Apple & Abercrombie Paid to Lose Earnings.

"Mr. Johnson liked to tell employees that there were two kinds of people: believers and skeptics, and at Apple, there were only believers. He wanted the same at Penney: when employees pushed back on Mr. Johnson’s strategies, they got nowhere, according to several former executives."


Forbes reports that it may be that the only way for JCP to survive is for it to follow in the footsteps of J. Crew - go private, which would allow the company to make the necessary strategic and infrastructure adjustments without the constant scrutiny of the media and the investor/analyst class.


Advertising Age reports this morning that "Sergio Zyman, the polarizing former Coca-Cola marketer, has been entrusted to begin charting a new path for the retailer ... To many, it will seem a surprising choice, given Mr. Zyman was part of one of the biggest marketing blunders in history: New Coke."


Reuters reports that one of the biggest individual financial losers in the JCP situation is, in fact, Ron Johnson: "Johnson is out at least $37.6 million so far, excluding his salary and fringe benefits, according to regulatory filings reviewed by compensation consultants Equilar.

"Johnson, who incorrectly bet Penney shoppers would take to his no-coupons, no-discounts strategy, put in $50 million of his own money to buy 7.26 million warrants in 2011. That gave him the right to buy shares at $29.92, a way to show investors confidence in his plan for Penney.

"The only problem for Johnson is that shares, which were worth $35.37 when he bought the warrants, fell 55 percent between then and Monday, when his ousting was announced. Under the terms of his agreement with Penney, Johnson was not allowed to exercise the warrants unless he was terminated from his job, in which case they would be exercisable immediately.

"With shares at $13.93 on Tuesday afternoon, hovering just above 12-year lows, the warrants are deep underwater and unlikely to rise to profitable levels for him any time soon."
KC's View:
If I were a shareholder, I'd be more concerned that the board has shown absolutely no vision by hiring back the guy it fired because he didn't have the right vision for the company.

This makes no sense at all. And if they fire him in six months to bring someone else in, what does that mean?