The once-mighty retail chain never recovered from the disastrous tenure of Ron Johnson, a former Apple executive who was hired as CEO in 2011 to reinvigorate the brand after the slow years of the Great Recession.
Johnson made a series of terrible marketing decisions that have since become something of a “what not to do” business parable.
He alienated the firm’s bargain-hunting customer base by abruptly eliminating sales and coupons — leading to a 40% decline in holiday revenues year-over-year — and ran up billions of dollars of debt.
J. C. Penney’s board fired Johnson in 2013, but the damage had already been done. He left the firm with negative earnings, a debt-to-equity ratio of almost 400%, and a free-falling share price.
Earlier this month, that share price crossed an ominous milestone: It stayed below $1.00 for 30 consecutive business days, triggering a warning from the New York Stock Exchange. J. C. Penney has six months to get its price back up above $1 or it will be delisted.
Management has proposed a reverse stock split to quickly bring the firm back into NYSE compliance. That might stave off a delisting for a few months, but ultimately it’s just delaying the inevitable.
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