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JCPenney’s Johnson Is Out, Ullman Is Back. Now What?

April 9th, 2013

In-aisle POS? That’s a done deal. JCPenney is already reportedly running 25 percent of its transactions on the mobile devices. Besides, it’s hard to imagine how JCPenney would approach Apple about getting its money back on all those card-sled-equipped iPods: “Hello, Tim? It’s us, Penney’s. If you let us return these tens of thousands of iPods for a refund, we promise not to ask for our money back on Ron Johnson. Deal?”

The data-center overhaul? That’s not so certain. Six weeks ago, Johnson told an earnings call that “partnering closely with Oracle (NASDAQ:ORCL), we are in the middle of a complete overhaul of our finance, merchandising, planning, allocation and store systems, so that we can compete with most modern systems in our industry.”

That sounds like the project is too far along to stop. But wait—that was just after Johnson told analysts, “We exit the year with a vision to completely overhaul our IT platform.” Visions are easy to abandon. If those 500 legacy systems that COO Mike Kramer was trying to replace haven’t yet been ripped out, the board may decide it’s cheaper to buy out the Oracle contracts than to pour more money down the hole. After all, Ullman got by with the old mainframes before, right?

What about the villages of shops-within-the-store? Johnson’s grand plan of completely redesigning every JCPenney store is probably too expensive to move forward on. But the chain has already installed some additional shops, including Levi’s and Joe Fresh, and has signed deals with other brands. If the new additions bring in the kind of sales that Sephora has for the chain, they’re probably worth keeping, even to the chain’s once-burned-twice-shy board.

The simplified organizational structure that’s supposed to save the chain $900 million a year in expenses? That’s almost certainly going to remain. So is anything else that actually cut dollars from the retailer’s cost structure. (There’s no way to know now whether that includes the associate sales commissions that Johnson abolished early on. But we will know within the next few months: If commissions return, that means they were ultimately cheaper after all.)

What almost certainly won’t remain is the very healthy IT capital-expense budget that Johnson talked the board out of. Ullman couldn’t get that kind of money before, and he’s certainly not going to get it now that the chain is in such dire straits.

And in that respect, JCPenney will be trying to turn the clock back to 2011 after all.


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One Comment | Read JCPenney’s Johnson Is Out, Ullman Is Back. Now What?

  1. Earl Jaforski Says:

    The debaucle here wasn’t that he was canned, it was what took them so long? Johnson’s genius was anything but, his experiences at Target were more relevant to JCP then his work at Apple. Merchandising the relatively simple assortment at an Apple store is one thing, merchandising the assortment at a JCP store is a whole other thing…. it’s a shame how badly he’s damaged this brand…

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