March 7 (Bloomberg) -- Chief Executive Officer Ron Johnson’s revival plan for J.C. Penney Co. won’t work, according to former CEO Allen Questrom.
“A turnaround for Penney isn’t going to work under Johnson, and the longer the board waits, the worse it’s going to get,” Questrom said in a telephone interview yesterday.
Questrom, who retired from the department-store chain in 2004, joins a chorus of criticism about Johnson’s performance in his first year as CEO. J.C. Penney last week reported that annual revenue fell 25 percent to $13 billion, the lowest since at least 1987. Customers have been increasingly alienated by marketing missteps, a failed attempt to transition away from sales and coupons and Johnson’s plan to turn most stores into collections of boutiques.
“I would have told him, ‘You can’t take a middle-market store in the middle of a recession and not have sales,’” Questrom said. “It’s never worked before. If you want to do that, you have to do it over a long period of time and certainly not in a recession when people want value more than ever.”
Johnson, Apple Inc.’s retail chief before joining J.C. Penney, has revived promotions and introduced new brands, including Canadian retailer Joe Fresh, this spring, in an effort to rekindle growth.
Daphne Avila, a spokeswoman for J.C. Penney, declined to comment.
Earlier this week, Vornado Realty Trust, once J.C. Penney’s second-biggest shareholder, sold 10 million shares of the company at $16.03 each, regulatory filings show. That’s 6.1 percent of the retailer’s common stock. Vornado, whose chairman Steven Roth is on J.C. Penney’s board, lost more than $200 million on the investment.
J.C. Penney rose for the first time this week today, gaining 2.7 percent to $14.82 at the close in New York. The shares have slid 25 percent this year following a 44 percent decline in 2012.
Questrom, named chairman and CEO of J.C. Penney in 2000, was previously the CEO and chairman of Barneys New York Inc. and Neiman Marcus Group Inc., with more than 40 years of retail experience. He is a senior adviser to Lee Equity Partners LLC.
He said a sale of the company, mentioned as a possibility by analysts including Citigroup Inc.’s Deborah Weinswig in a note yesterday, may not be lucrative.
“If it’s in the position it is today, you’re going to get a low price,” he said.
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