Why JCPenney is in serious trouble
Lowe's has tapped JCPenney CEO Marvin
Ellison as its new chief executive.
Ellison had been trying to lead a turnaround
at JCPenney, but that has not been going well recently. It lost $69 million in
the most recent quarter.
JCPenney will replace Ellison with an
"office of the CEO" in which four executives will share
responsibility for running the company while it conducts a search for a new
CEO.
Shares of JCPenney (JCP) sank
4% in morning trading following the announcement. Shares of Lowe's (LOW) was
slightly higher on the news.
Ellison is currently one of only three black
CEOs leading a Fortune 500 company. He came to JCPenney in 2014 after a 12-year
career at Lowe's rival Home Depot (HD),
eventually serving as executive vice president of that chain's US stores. He
had worked at Target (TGT) for
15 years before that.
"Attracting Marvin is a great win for
the entire Lowe's team," said Marshall Larsen, lead director of the Lowe's
board.
At first it appeared that Ellison had succeeded in turning
around JCPenney. It reported a strong holiday
season for 2015, a year after he took the top job there and
predicted the improved sales would continue. But soon the losses returned.
Ellison will start at Lowe's on July 2, replacing retiring
CEO Richard Niblock. Unlike Niblock, he will not be chairman -- the company
named director Richard Dreiling to that post.
Lowe's has been under pressure too. Although it has been
profitable its stock has trailed Home Depot's performance over the last two
years. Home Depot's stock has risen 42% over that period, but Lowe's shares are
up only 9%.
Under pressure from an activist investor, Lowe's recently
named three new members to the board.
No comments: