NEW YORK -- J.C. Penney Chief Executive Officer Marvin Ellison, one of only a handful of black CEOs to lead a Fortune 500 company, is leaving to become the top executive at Lowe's.
The announced departure of Ellison on Tuesday sent shares of the besieged department store down 7.6 percent to $2.31.
The departure could hardly arrive during a more precarious time for J.C. Penney. With consumer spending on the rise, it was among the few retailers that failed to show a clear benefit in the most recent quarter. Instead, the department store slashed its profit expectations for the year.
Ellison took the top job at J.C. Penney in late 2014. He has attempted to shift the company's focus toward home appliances, following a shift by consumers away from spending a lot of money on clothing. He did make some inroads, but the turnaround is far from complete.
On July 2 he will succeed Robert Niblock, who had previously announced plans to retire.
Investors were unsure about what the departure means for the department store, but it was a different story for Lowe's, which has struggled to keep pace with rival Home Depot. Ellison spent 12 years at The Home Depot Inc. before he joined J.C. Penney.
"Ellison's exit will raise speculation that he is not particularly optimistic about the future prospects of [Penney] and sees the grass as being greener at Lowe's," wrote Neil Saunders, managing director of GlobalData Retail in a note. "Indeed, exiting before his plan is complete is a tacit admission that he may not be able to deliver what investors are looking for. This will be particularly damaging to staff morale, especially because Ellison is a popular leader who has connected well with almost everyone he works with."
J.C. Penney said Tuesday that in place of a CEO, it has created an "office of the CEO," staffed by chief financial officer Jeff Davis, chief customer officer Joe McFarland, chief information officer and chief digital officer Therace Risch and Mike Robbins, executive vice president over the supply chain. The four executives will share equal responsibility for the company's day-to-day operations until a new CEO is named.
Ronald Tysoe, an independent director on the board, was named as chairman Tuesday.
Business on 05/23/2018