Successful CEOs need a positive attitude and loads of confidence, but sometimes unrelenting optimism is just not warranted.
Ron Johnson, former CEO of J.C. Penney discovered that truism. And now Penney’s new and former CEO, Myron, “Mike” Ullman has also delivered a strongly positive forecast of his company’s future despite a variety of challenges starting with a dismal first quarter report.
Although Penney’s stock since Johnson’s departure was up about 25 percent as of mid-May, the firm reported a loss of $348 million for Q1, 2013. Losses under Johnson were almost $1 billion, as sales dropped by $4.3 billion.
In an hour long conference call to Wall Street analysts and investors Ullman asked for time and patience.
The new CEO said Penney’s “fundamental business prospects remain strong,” and its “senior leadership team is now intact.”
Ullman and his senior management crew have begun the work of undoing Johnson’s destructive strategy and beginning Ullman’s new programs, designed to win back old customers and attract new ones.
Johnson’s strategy of abandoning discount pricing in favor of occasional sales did not work, nor did other marketing tactics he employed to resurrect what seemed like a dying company. Penney shares on the NYSE fell more than 50 percent during Johnson’s disastrous tenure.
Now, however, with $1.85 billion in cash and credit and the prospect for more, Penney has sufficient capital to implement Ullman’s programs.
Ullman’s marketing blitz will include Sunday newspaper ad inserts, discount price coupons, store renovations, bringing back some successful old brands such as St. John’s Bay, Ambrielle, Made for Life and JCP Home, which Johnson cut.
Complementing marketing efforts will be a public relations appeal to former customers to return and for new customers to give Penney a try.
Referring to former Penney’s customers, Ullman said in the conference call, “We are optimistic we can win them back…We are going to compete aggressively.”
Despite Penney’s big Q1 loss, some analysts see Ullman’s new marketing and merchandising programs as optimistic, with improved numbers forecast.
“We were most impressed with the sequential improvement in traffic,” said Citigroup analyst Deborah Weinswig. She expects no additional losses for the firm and an increase in sales.