Looking to take a bite out of Apple and achieve similar success, department store retail chain J.C. Penny has hired Apple senior vice president of retail Ron Johnson as its chief executive.
Johnson will assume the role as CEO on Nov. 1, 2011 and will report to J.C. Penny Chairman Myron E. (Mike) Ullman III. Johnson is succeeding Ullman in the role of CEO. Johnson will also join J.C. Penny's Board of Directors at the beginning of August.
I've always dreamed of leading a major retail company as CEO, and I am 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. I have tremendous confidence in J. C. Penney's future and look forward to working with Mike Ullman, the Executive Board and the Company's 150,000 associates to transform the way America shops, Johnson said in a statement.
Johnson has been instrumental in launching Apple as a successful retail outlet across the globe. During his 11 years as Apple's retail chief, Apple went from exactly zero retail stores to more than 300 internationally (and growing). Johnson was the man responsible for Apple's unique retail feel (such as implementing the genius bar) and making Apple's retail department the most profitable retail chain in the world per square foot.
Prior to Apple, Johnson spent 15 years at Target and helped build that company into a retail giant. Analysts say Johnson's success and experience will be hard to replace.
We consider Mr. Johnson as a top five executive at the company and we view his departure as a meaningful loss - especially considering his impressive execution to date. Apple is still undergoing significant retail expansion plans, expecting to open 40 new stores this year (75% international), Ben Reitzes, an analyst at Barclays Capital, said in a note.
Meanwhile Apple's loss is J.C. Penny's gain. The retail giant's stock rose 17.47 percent or $5.26 per share, on the news of Johnson's hiring. The company, which has 1,110 stores across the country, could use a boost. While Apple got the most out of its retail space at $4,355 per square foot, J.C. only got $153 per square foot. Last year J.C. Penny's revenue actually increased for the first time since 2006 after three years of decline.
Johnson seems to have faith in J.C. Penny. Immediately after the announcement, Johnson committed to make a personal investment of $50 million in the company through the purchase, at fair market value, of 7 1/2-year warrants on 7.257 million shares of J.C. Penny stock.
Apple said it is actively recruiting its replacement. Reitzes said the replacement will have his or her hands full with the company's plans to open Apple Stores in China.