How Did Ron Johnson Mess Up At J.C. Penney?

How Did Ron Johnson Mess Up At J.C. Penney?
By J.C. Penney (Brand New design website See article here) [Public domain], via Wikimedia Commons

J.C. Penney Company, Inc. (NYSE:JCP) shares have been recovering a bit since now-former CEO Ron Johnson was pushed out. The stock rose as much as 2.6 percent in regular day trading on Thursday.

How Did Ron Johnson Mess Up At J.C. Penney?

Since Johnson’s ouster, there’s been a lot of consideration about what he did wrong. It’s easy to play the “would’ve, should’ve, could’ve” game in a situation like this, and Fast Company’s Danielle Sacks believes she has some insight into how Johnson messed up (hat tip to ValueInvestingWorld and MarketFolly for drawing our attention to this story).

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Nuggets Of Un-Wisdom From Ron Johnson?

What Sacks has basically done in her story is go through an interview she did with Johnson at the beginning of his tenure at J.C. Penney Company, Inc. (NYSE:JCP). She pulled out some nuggets of what he said that she felt he made a mistake about.

First, she pointed to some comments he made about J.C. Penney Company, Inc. (NYSE:JCP) being “a big $18 billion startup.” Of course the aging retail chain is more of a dinosaur than a startup, but it’s easy to see why so many people believed at that time that the company needed to reinvent itself.

Investors seemed to like what Johnson was doing at the beginning because it was new and different, but the tide changed when shoppers became confused. Running a startup requires you to figure some things out as you go along, so there were some similarities there. Johnson wasn’t completely out to lunch on this one, although he wasn’t totally right either.

Other Pearls From Johnson’s Interview About J.C. Penney

Other areas of interest that were pulled out of the interview with Johnson related to his gut feelings about retail and his comparison of the company to Apple. While there’s something to be said about gut feelings to some extent, I would agree that Apple Inc. (NASDAQ:AAPL) doesn’t have anything in common with J.C. Penney Company, Inc. (NYSE:JCP).

I would also agree that it takes a different skill set to act as CEO of a whole company than it does to act as retail chief of a larger company. But at the end of the day, Johnson didn’t really have enough time to do what needed to be done. We’ll never know if what he was doing would have worked, but one thing’s for sure: J.C. Penney has a long, tough road ahead. Any sort of changes are going to take some time for shoppers to get used to, and at this point, the chain may not be able to survive no matter who leads it.

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