JCP Stock Lesson #1 – Never Mistake a CEO’s Luck for Talent
When former Apple (AAPL) executive Ron Johnson was hired as CEO of JCPenney, the market lauded the announcement as the beginning of a new — and better — era for the struggling retailer. The value of JCP stock jumped 17% in one day following the news, and why not?
After all, Johnson was the guy who made Apple’s retail stores a tourist destination of sorts … a consumer-technology amusement park. They were always crowded, and Johnson had to be the reason why.
As it turns out, the success of AAPL direct retail efforts had more to do with the quality of the product and less to do with Johnson’s retail acumen. When the same “shop” approach was employed in several areas in all JCPenney stores, the shops ultimately cannibalized the core JCP business far more than they contributed to new growth (though they were called a success by the few folks who actually walked through them).
As for Johnson’s legacy, the value of JCPenney stock fell 57% during his year-and-a-half tenure, roughly in step with the 22% decline in the retailer’s annual sales total for that timeframe.