Marvin Ellison, J.C. Penney’s next leader, laid out his plans for how the chain can thrive again, a vision that includes cutting supply-chain costs, improving customer service and better connecting stores to the Web.
The former Home Depot executive, who shared his ideas for the first time Wednesday, came to J.C. Penney in November as CEO-designee. He is officially taking the reins from Mike Ullman on Aug. 1, but the two have recently shared CEO duties, with Ellison having the final say on long-term decisions.
Since joining the retailer, which is in its third year of recovering from the disastrous tenure of former CEO Ron Johnson, Ellison has visited stores in a dozen states. He has also met suppliers in Asia and partners, such as the European fast-fashion brand Mango. Ellison said J.C. Penney presents a unique challenge.
“I couldn’t find a greater upside opportunity where the financial downturn had been specifically driven by poor strategic decisions — not a disruptive competitor, not a change in the economic landscape,” Ellison said Wednesday at the Piper Jaffray Consumer Conference in New York, his first extended public remarks.
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Ullman has already done a lot to revive the chain since taking back the CEO job in April 2013. He restored private brands and promotions and ended a costly remodeling program that didn’t boost sales. That stabilized the retailer and ended revenue declines of up to 25 percent in a year.
Now Ellison is on to the next leg of the turnaround. He plans to increase profit and sales by reducing shipping times, dedicating more labor to helping customers and improving the chain’s online presence — all strategies that he oversaw during his 12 years at Home Depot.
He reiterated that by 2017, the chain expects to reach $1.2 billion in earnings before interest, taxes, depreciation and amortization. That kind of profit, which is a measure of core operations, was $297 million in the year that ended in January.
Investors have yet to be impressed. J.C. Penney’s stock has declined 3.5 percent during the past year, compared with a 7.9 percent gain in the Standard & Poor’s 500.
Ellison said Penney is behind when it comes to connecting the Web and physical stores — what the industry has dubbed omnichannel.