J.C. Penney Co. named Ron Johnson, currently the senior vice president of retail operations at Apple Inc., its next CEO.
Johnson assumes his new position on November 1, 2011, and will succeed Myron “Mike” Ullman, who will become executive chairman of the board, said J.C. Penney in a news release on Tuesday.
One of largest department store chains in the U.S., with over 1,100 stores across the nation, but an underperformer in recent years, J.C. Penney hopes that the man who made Apple one of the best retailers in the world will inject new life into what commentators call a “lackluster presence.”
Johnson’s induction may indeed be the proverbial shot in the arm.
Since the news of this coup of sorts became public, Penney’s shares have added $5.26, or 17.5 percent, to close at $35.37. Its market value rose more than $1 billion.
Johnson goes to J.C. Penney after having spent over a decade with Apple, where under his watch the technology giant expanded its retail business to over 300 locations in the U.S. and abroad, generating revenue of $3.19 billion in the quarter that ended in March.
Johnson still calls Apple “perhaps the greatest company in the world,” but he now seeks to fulfill his dream of “leading a major retail company as CEO,” a dream beyond fulfillment in the current corporation.
According to Reuters, Apple Chief Operating Officer Tim Cook is widely assumed to be first in line to be CEO, making it unclear whether Johnson would ever have gotten the top job.
Johnson told The Associated Press that he is “thrilled to have the opportunity to help J. C. Penney re-imagine what I believe to be the single greatest opportunity in American retailing today, the Department Store.”
While Johnson wanted to go back to his roots in retailing, J.C. Penney had been looking for someone who will watch over as the retailer gears up to the newer challenges of digital retailing. With vast experience in integrating retail and technology, Johnson fits the bill perfectly.
But some commentators have observed that retailing at J.C. Penney will stretch the retail guru.
Hal Reiter, CEO of Herbert Mines Associates, a recruiting firm in the retail industry, told AP that Johnson "knows how to doll up an environment." The question, he said, is, "How can you merchandise a pair of jeans" and make it as exciting as Apple's products?”
The appointment could prove lucrative for Johnson, but he's taking on a big risk that he can improve the value of J.C. Penney's stock, The Wall Street Journal cautioned.
At present, J. C. Penney lags behind Macy's Inc. and Kohl's Corp., the two leading department chains.
Johnson’s departure is expected to hit Apple too, where he did with retailing what Steve Jobs had done for technology – revolutionizing the concept. There are not many stores where customers line up overnight to grab a product.
The departure is a surprising loss to Apple, which has put heavy emphasis on its stores and has been expanding aggressively internationally, reported WSJ.
The spokeswoman for Apple, however, said, they “are actively recruiting for his replacement.”
Besides taking the reins of the new company, Johnson will receive a base salary of $1.5 million, and the opportunity to make a cash bonus of $1.875 million if he reaches certain performance goals, which the company did not disclose, according to documents filed with the Securities and Exchange Commission. He also will receive a grant of $1.66 million shares of restricted stock, AP reported.
Johnson received his MBA from Harvard Business School and his Bachelor of Arts at Stanford in Economics.
Before joining Apple, Johnson spent 15 years at Target Corp. Johnson has asserted that the decade and a half long experience as a merchandising executive at this huge retailing company helps him understand the needs of J.C. Penney's budget-conscious shoppers, as reported by Reuters.