J.C. Penney gets new president, hopes for modernization

November 4, 2011  

By Sara Carabasi

The economic boom of the late 1990’s may feel like ancient history to most Americans. The current weak economy has left people and companies floundering all around the nation, including J.C. Penney Company, Inc. As a company that targets middle-class customers, Penney has struggled as many of its customers have faced unemployment.

However, things may be turning around for Penney. Compared to other department stores, Penney may not be considered a “hip” place to shop, but the company is certainly looking to head in that direction. The company hired a new president, Michael Francis, in an effort to modernize the department store. Francis, formerly Target’s top marketing executive, will help Penney compete with other more popular discount stores, such as H&M.

Snagging Francis may be the key to restoring Penney. While store sales and total net sales grew slightly in 2010, they’re still lower than they were before the recession hit in 2006. Thus, Penney is looking to revive its brand. Francis helped Target expand into Canada as well as create a more fashion forward image for the store.

Sophia Ahl, a Target and Penney customer, believes Francis can help modernize Penney. “So many people shop at Target because they offer everything at reasonable prices,” said Ahl. “You can find bathing suits, watches, shampoo and school supplies. If Francis does the same thing with Penney that he’s done with Target, I think Penney is in good shape.”

This isn’t the first time Penney has made management changes. In June, Penney replaced Mryon E. Ullman and named Ron Johnson, former senior vice president of retail at Apple, as its new chief executive. Because of his experience at Apple, Penney is hoping Johnson will bring trend-setting ideas to the company. This new management team may put Penney in a good position to update and renew its image.

With the announcement of Johnson as CEO came instant gains for Penney. One person who was significantly affected was Bill Ackman, owner of the hedge fund Pershing Square, Penney’s largest shareholder. When Penney named Johnson as CEO, stocks surged and Ackman’s stake jumped by about 200 million dollars.

Since 1902, Penney has remained one of America’s largest department stores. The modern retailer is vastly different from its beginning as a small dry-goods store, as it operates over 1,100 stores throughout the United States and Puerto Rico.

Mary Bernard, a Penney customer, agrees that the chain store needs a boost. “I like shopping at J.C. Penney because they have basic items at a good price,” said Bernard. “But if they could do something similar to what Target did with Missoni, and make the store stand out, I think Penney could really reinvent itself.”

One step in that direction has been the expansion of Sephora inside J.C. Penney stores. In the latest quarter, the company opened 22 new locations of the popular cosmetics chain, bringing the total to 276 locations.

Kim Kirkpatrick, a recent college graduate, is looking forward to Francis assuming his new role. “I know a lot of people are feeling the money pinch,” Kirkpatrick said. “As a recent college graduate, I know I am always looking to save money. If Francis turns J.C. Penney into a more modern store, similar to something like H&M, I think a lot more people will shop there.”

Sales have been shrinking since 2006, and Penney is taking the appropriate steps to work towards turning sales around. Penney, along with other retailers, has been greatly affected by the slow economy. Thus, as Penney continues reconstructing the company, progress may be made in waves in times of the turbulent economy.

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