JCPenney President Departs, CEO Johnson to Assume Duties

In Reports, What's New, People by Accessories Staff

Retail Math: A JCPenney that clearly spells out its new price strategy

Plano, TX—Michael Francis, the former Target chief marketing officer hired to help get the message out about JCPenney’s transformation, has left the company, JCPenney said Monday.

Francis, who was president at JCPenney, left the company effective Monday. Chief executive officer Ron Johnson will assume Francis’ marketing, merchandising and sourcing duties. No reason for given for Francis’ departure.

One of the first top executives named at JCPenney last October, Francis had been Target’s chief marketing executive for a decade.

“He is an extremely talented executive with the vision and courage to re-imagine the department store experience,” Johnson said of Francis when he was hired.

Since  JCPenney introduced its “Fair and Square” strategy in January, JCPenney has thrown out doorbuster specials and discount coupons in favor of everyday low prices and special sales. The department store also saw its first quarter sales plummet 20% as its customers struggled to understand the new transformation.

“Our marketing isn’t doing the work. It needs to communicate pricing strategy and bring in more traffic,” said Johnson last month. “We’ve got to get our pricing across.”

The news that Francis’ abrupt departure, coupled with that as that of Michael Dastugue, chief financial officer, in April brought criticism from some retail analysts.

Francis Had Artistic Approach, but an Effective One?

“The lack of continuity within the C-Suite has to be a concern considering the company is only at the outset of its turnaround effort,” wrote Deutsche Bank analyst Charles Grom. “Said differently, we’re afraid the environment in Plano has become ‘Ron’s way or the highway,’ which is never a good culture for a company trying to find itself.”

Echoing those criticisms, Paul Lejeuz, analyst at Nomura, said Francis played a key role in finding new vendors for JCPenney, which plans shop in shop concepts inside many of its stores starting this August.

“The departure of Francis does not help build confidence that the grand turnaround plan envisioned in January will materialize,” said Lejeuz.

But Deborah Weinswig, analyst at Citi, said JCPenney is struggling to effectively communicate its message of transformation.

“We expect the company to focus on correcting these issues before back-to-school shopping, and believe the transformation strategy remains on track,” Weinswig said.

Lizabeth Dunn, an analyst with Macquarie Group, told Bloomberg that Francis’ approach to marketing had been artistic but not necessarily effective.

“It seemed as though that was a philosophical difference with Michael Francis and the rest of the management team,” Dunn said.

Meanwhile, William Ackman, whose hedge fund Pershing Square Capital Management is JCPenney’s largest shareholder, reiterated again his confidence in Johnson and the company’s transformation which could take four year to complete.

“The bottom line is, the marketing strategy wasn’t working,” Ackman said. “Ron decided that he really needed to take over the marketing and advertising.”

 

 

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