Penney makeover dealt another blow as president bolts
- Last Updated: 1:01 AM, June 19, 2012
- Posted: 12:30 AM, June 19, 2012
There are no closeout sales at Penney’s, but the retailer’s president absolutely must go!
Michael Francis — a former Target exec who was named JCPenney president just eight months ago by CEO Ron Johnson — has abruptly left the flailing department-store chain.
Penney shares tanked in after-market trading yesterday following the 4:20 pm announcement, losing 5.6 percent to trade as low as $22.99 — a fresh 52-week low.
That’s on top of a 2.3 percent decline during regular trading.
Investors continue to worry that Johnson’s controversial strategy to eliminate coupons and clearance sales is backfiring. Badly.
Investors and suppliers likewise fretted yesterday that Francis’ departure was a bad sign for Penney’s fresh effort to improve its stable of brands — which lately has added Martha Stewart and Michael Graves.
“The word is that they agreed to disagree on strategy, and that’s a troubling thing,” said one industry insider. The reason for the exit couldn’t be confirmed.
Francis “had more credibility with vendors than Johnson — he’s the one who probably should have been CEO,” the source added.
Johnson, a former Apple exec, got the top job at Penney last year on the strength of his stint under legendary tech guru Steve Jobs — despite the fact that Johnson had never headed a public company.
Francis, a longtime pal and colleague of the CEO, is a marketing whiz who in recent years had been the force behind Target’s highly successful “cheap chic” image.
Last month, Francis took the stage in New York alongside Johnson before a crowd of analysts and investors to explain Penney’s worse-than-expected first quarter, which included a 20-percent sales drop amid slowing traffic.
A terse statement late yesterday gave no reason for the departure of Francis, but sources said Johnson’s stubborn insistence on plowing ahead with the new pricing strategy has sparked concerns throughout the chain.
“Johnson is doing video broadcasts to store managers, telling them they’re not going to backtrack on pricing,” according to a source, confirming that dwindling store traffic continues to stoke concern among the rank and file.
In exchange for taking the No. 2 spot at Penney, Francis got a $12 million signing bonus last fall as part of a $44.7 million pay package.
“We thank Michael for his hard work at JCPenney and wish him the best in his future endeavors,” Johnson said in the statement.
The 52-year-old CEO said he would immediately assume Francis’ duties over marketing and merchandising.
But Francis also supervised “planning and allocation, and product development and sourcing functions,” Penney said when Francis was hired.
“It seemed like Francis had more responsibilities than Johnson did,” one analyst said. “I’m trying to figure out what part of the company Francis wasn’t responsible for.”
“It’s a catastrophic blow to the bull case for the shares,” said Deutsche Bank analyst Charles Grom.