In April, Ron Johnson’s tenure as J.C. Penney’s (NYSE:JCP) chief executive officer came to a close. Alongside his name in the history books will be the grim set of numbers that characterized the company’s recent operations: the 25 percent plunge in revenues, the 50 percent decline in stock price, the 13 percent drop in customer traffic, and the $170 million spent to install Johnson and his top three executives.
That last cost has often been overlooked, getting lost in the wave of criticism that Johnson’s turnaround efforts garnered.
In order to steer J.C. Penney away from its image as a discounter, the former CEO believed that the department-store chain needed offer consumers more upscale products rather than the company’s traditional private labels that were created in-house, even though these items create a much more profitable business with higher margins. He transformed the company’s pricing structure so that it reflected “everyday low prices” and launched a plan to organize the retailer’s floor space into a cluster of small boutiques in an attempt to revitalize the company’s business.
But the proof is the numbers; the $170 million spent on the executives only resulted in a worse financial situation.