NEW YORK (AP) -- A JPMorgan analyst said on Monday that J.C. Penney is looking for ways to stabilize operations, two days after the struggling department store chain ousted its CEO Ron Johnson and reinstalled former CEO Mike Ullman to the top post.
Analyst Matthew Boss said in a note to investors that the move to replace Johnson was abrupt, but not a complete surprise given Johnson's lack of success with his turnaround strategy, which involved ending sales and coupons and revamping stores into mini malls of smaller specialty shops. Shoppers rejected the changes and revenue in stores open at least one year fell 25 percent, while the stock price fell more than 50 percent during Johnson's tenure.
Boss said that after speaking with the company, the board of directors is looking for "stability" and "immediate execution," two things that Ullman's familiarity with the company might help with.
He said a "bridge strategy" to stabilize operations by the key back-to-school period is likely in the next few weeks. That means expect a return to coupons, nixing an "everyday low pricing" strategy in favor of high-low prices in hopes of boosting sales and slowing the opening of the mini specialty stores.
Still, Boss said to expect a weak first quarter, forecasting revenue in stores open at least one year will fall 15 percent, causing the Plano, Texas, chain to burn through more cash. Revenue in stores open at least one year is a key measure of a company's fiscal health because it excludes results from stores recently opened or closed.
J.C. Penney did not return a request for comment.
Its shares fell 5 cents to $13.88 in midday trading after falling as low as $13.55 earlier in the session. That was its lowest price since February 2001, according to FactSet.
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