NEW YORK — In the latest sign of turbulent times at J.C. Penney Co., the mid-price department store chain said Michael Francis, the former Target Corp. executive brought in to help redefine the brand, is leaving the company.
In a terse statement issued late Monday, the department store operator gave no reason for the immediate departure of Francis, who joined the company last October. Shares fell nearly 6 percent in after-hours trading.
“We thank Michael for his hard work at J.C. Penney and wish him the best in his future endeavors,” said Ron Johnson, Penney’s new CEO and a former Apple Inc. executive who has been trying to transform the chain from a retail has-been to retail darling.
Penney said that Johnson will assume direct responsibility and oversight of the company’s marketing and merchandising functions.
The surprise move comes as the department store chain is scrambling to reverse a sharp drop in customer counts and sales after Johnson’s new pricing plan ended up turning off customers, who are accustomed to seeing markdowns.
Since announcing abysmal first-quarter results last month, Penney has been making changes to its advertising and marketing to better explain the three-tier pricing strategy that entails everyday low prices that are 40 percent lower than a year ago; monthlong sales that are deeper and are on select items; and clearance sale events or “Best Price Friday” sales.
But the company has also been backpedaling as well. It added five “Best Price Friday” sales throughout the year, including one on the Friday before Memorial Day weekend. That’s in addition to the Best Friday sales which are held on the first and third Friday of every month. The company is also resurrecting the word “sales” in its advertising, a word that was taboo under Johnson’s original plan.
Analysts were surprised by the abrupt departure of Francis, who was hand-picked by Johnson. Francis, a long-time Target executive, helped transform the discounter to become a cheap chic merchant.
At Target, Francis was responsible for merchandising, marketing and product development, and was behind a monthly magazine that highlighted key items. The monthly issues resembled Target’s whimsical style.
“What they were doing hasn’t worked. (Francis) is the fall guy,” said Walter Loeb, New York-based retail consultant. But he said ultimately, people have to look at Johnson, who directed the pricing plan.
Brian Sozzi, NBG Productions analyst, noted, “the sudden nature of the departure underscores, in our opinion, the big-time mistakes JC Penney has made in articulating the new image and policies.”
Penney has hired a number of big-name executives to help transform everything about the retailer, from the brands it carries to the store experience. The riskiest move, however, was the elimination of hundreds of sales events in favor of more predictable low prices.
After Johnson laid out his vision for the new pricing strategy to analysts at the end of January, shares soared, peaking at $43.13 on Feb. 9. But they have lost almost half of their value since then.