JCP chief brings in Apple buddies, company reports 3Q sales decline
PLANO, Texas — JCPenney, which reported sales and income decreases for the third quarter, has brought on two new executives to join fellow Apple alumnus, CEO, Ron Johnson.
JCPenney reported a net loss of $143 million, or 67 cents per share, for the third quarter ended Oct. 29, compared with net income of $44 million, or 19 cents per share, for the same period last year. According to the company, restructuring and management transition charges contributed to the third-quarter loss. Excluding these charges, third-quarter income was $24 million, or 11 cents per share.
Executive chairman Myron Ullman, III, said, "While our more affluent customers continued to respond well to JCpenney's attractions, the moderate customer continues to have limited discretionary spending capability, and that was apparent during the quarter. However, the combination of customer response to the style and value we offer in categories such as women's and men's apparel and accessories, coupled with the expense reduction initiatives we put in place over the course of 2011, allowed us to report results in line with our expectations."
The company reported that total sales decreased 4.8% and comparable-store sales for the third quarter declined 1.6%. The total sales decrease reflected the company's exit from its catalog and catalog outlet businesses, JCPenney said. Internet sales through JCP.com were $341 million in the third quarter, decreasing 5.4% from last year. The strongest merchandise results in the period were in women's accessories and men's apparel, the company said. Geographically, the best performance was in the Southeast region of the country.
For the fourth quarter, JCPenney said it expects comparable-store sales to be flat to up slightly. Earnings per share are expected to be in the range of 64 cents to 74 cents per share.
In separate announcements, JCPenney named new leadership for its finance and human resources departments. Michael Kramer has been named chief operating officer, effective Dec. 5, and Daniel Walker has been named chief talent officer, effective Nov. 16.
Walker, who was the chief talent officer at Apple from 2000 to 2004, will be in charge of all HR functions at JCPenney and will report to another former Apple exec, CEO Ron Johnson.
During his time at Apple, Walker was instrumental in recruiting Johnson to Apple to lead the retail effort, JCPenney said. Walker's experience also includes time at Gap Inc., from 1986 to 1992, where the talent supply chain model he created helped establish Gap Inc. as a world leader in specialty retail in the early 1990s, according to JCPenney. Most recently, Walker was in charge of his human capital firm, The Human Revolution Studios. Walker began his career in human resources at Lazarus Department Stores, a division of Federated Department Stores. He served for four years with the U.S. Army Security Agency, and holds a B.S. in psychology from The Ohio State University.
Johnson said, "Dan is a dynamic executive with a remarkable track record of transforming the talent profiles of companies that have gone on to redefine their industries. No one is more creative in this field than Dan. Having worked with him during five years of enormous growth at Apple, I know that he has the vision and energy to help us redefine the department store shopping experience at JCPenney."
Kramer will be responsible for finance, investor relations, corporate strategy, and information technology. He will also report to Johnson.
Since 2008, Kramer has been president and chief executive officer of Kellwood Company, where he oversaw a portfolio of premier fashion brands, including Scotch & Soda, Vince, Rebecca Taylor, ADAM, BLK DNM, David Meister and XOXO, among many others. Prior to that, he was EVP and CFO at Abercrombie & Fitch. Like Walker, Kramer is another former Apple exec, who worked under Johnson from 2000 to 2005. He earned his B.S. from Kansas State University in 1987 and is a Certified Public Accountant.
"Mike is an extremely talented executive, and I am thrilled to be working with him again," Johnson said. "In building our senior management team, we have targeted leaders, like Mike, with imagination as well as deep and diverse skills. His long experience in senior operational and financial positions at leading retailers, as well as his most recent role as the CEO of a large, diversified wholesale company serving the department and specialty store industry, makes him uniquely well-suited for this role. Mike will help ensure that J. C. Penney is a strong partner to our suppliers, which will be essential to our success as we set out to re-imagine the department store experience."