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April 9, 2013 at 7:28 AM
Ron Johnson ousted after failing to turn J.C. Penney into Apple stores
Ron Johnson, the wonder boy who led Apple’s retail business and became chief executive of J.C. Penney, has been ousted by the retailer’s board after he failed to turn a pasty Red Delicious into a shiny Honeycrisp.
Here is the an Associated Press story. Penny’s has rehired it’s previous chief executive, Mike Uhllman, to resume his old position.
The past 16 months of Johnson’s leadership was the most fascinating business story. Johnson tried to turn a discount department store into a Genius Bar. It ditched coupons and markdowns and began a store-by-store makeover. Here is what happened to sales:
And here is what happened to the company’s profit over the same period.
Analysts worried company would run out of cash as Johnson invested in remodeling stores so it looked more like a collection of boutiques.
It turns out selling $15 blouses to thrift-minded shoppers required a different approach from selling $1,500 Macbooks. A department store with thousands of items could not be run like a showroom displaying five devices on dining tables. And just because someone could serve as lieutenant to a visionary CEO like Steve Jobs didn’t mean he could be one. (Across the Atlantic, analysts are watching Nokia like a hawk, wondering if Stephen Elop, former Microsoft division president, can turn the money-losing Finnish mobile company into a cash cow like Microsoft Office.)
Johnson’s fall is a cautionary tale for tech executives, who presume the success of a company as their own. It’s a lesson for investors and directors, who were hypnotized by a Genius Bar. Shoppers, on the other hand, were not surprised.