J.C. Penney Names Apple Exec as New CEO

By ANNE D'INNOCENZIO
|  Tuesday, Jun 14, 2011  |  Updated 12:39 PM CDT
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J.C. Penney Names Apple Exec as New CEO

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J.C. Penney Co. has named Ron Johnson, who pioneered Apple Inc.'s retail stores, the department store chain's next CEO.

The appointment takes effect Nov. 1, the retailer said Tuesday.

Johnson, 52, who had served for the past 11 years as senior vice president of retail at Apple Inc., will succeed Myron Ullman III, who has been CEO and chairman since December 2004.

Johnson will report to Ullman, who will become executive chairman. Johnson will also join J.C. Penney's board of directors in August.

During his 11 years at Apple, Johnson led Apple's retail stores and has been credited with developing the popular Genius Bar, where customers can get hands-on technical support for their Mac, iPad or other devices.

Apple's retail chain has grown to 300 stores in the U.S. and abroad and has become the gold standard for other retailers looking to make their stores modern and exciting. Johnson joined Apple after 15 years at Target Corp., where he was a merchandising executive who led the team that brought designer Michael Graves' products to the "cheap chic" retailer.

Johnson "is widely recognized and highly regarded in the retail industry for his creativity and innovation, his commitment to empowering employees to deliver an unparalleled customer experience, and to making stores exciting places where people love to shop," Ullman said in a statement.

Since taking the helm of J.C. Penney in December 2004, Ullman had built on the success of his predecessor Allen Questrom, who was credited for turning around ailing sales.

Under Ullman's stewardship, Penney has moved from offering mainly store brands to filling its floors with trendy Sephora cosmetics shops and affordable lines like Cindy Crawford Style. Last year, it became the only U.S. retailer to sell Liz Claiborne and Claiborne women's wear. It's also the only department store selling MNG by Mango, a European clothing chain.

During the first quarter, J.C. Penney added 23 Sephora shops inside Penney stores, bringing the total to 254.

Penney has also opened a new unit devoted to finding new revenue streams. As part of this initiative, the company opened the first 10 Foundry Big & Tall Supply co. stores, six in the Dallas-Fort Worth area and four in Kansas City.

Johnson's appointment is a sign that J.C. Penney is positioning itself for a new era in which shoppers increasingly use their mobile phones to check prices or shop.

In clothing, J.C. Penney has been squeezed by competition from Macy's on the high end and Target and H&M on the cheaper end. Its competitors are also expanding exclusive items to make them stand out.

Johnson brings expertise in both "soft goods" like clothing and "hard goods" like gadgets, said Gilbert Harrison, CEO of Financo, an investment banking boutique that specializes in retailing.

"In my opinion, (Johnson) is a great merchant. He has done a phenomenal job," Harrison added, though he said he was surprised to see Johnson leave Apple.

Johnson "knows how to doll up an environment," said Hal Reiter, CEO of Herbert Mines Associates, a recruiting firm in the retail industry. The question, he said, is, "How can you merchandise a pair of jeans" and make it as exciting as Apple's products.

J.C. Penney also said Johnson requested to make a personal investment of $50 million in the company through the purchase, at fair market value, of 7½ warrants on 7.257 million shares of Penney stock. The warrants cannot be sold or hedged for the first six years of their term and have a strike price of $29.92, the closing price of the stock on the business day before Johnson's commitment to purchase the warrants.

Penney's shares rose $4.04, or 13.4 percent, to $34.15 after the announcement.

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