PLANO –– On the heels of this week’s announcement by Plano based J.C. Penney that it is laying off two thousand employees and closing 33 stores, some are calling for the ouster of the chain’s interim CEO, Mike Ullman.
Investment research outfit Hedgeye writes, “Recent announcements hardly match up with a company that has confidence in its future”.
Hedgeye surmises that Ullman is positioning himself for an exit from the top job at Penney’s:
“We’d like to think that accepting the role of Chair of the Federal Reserve of Dallas, and then being elected to the Board of the National Retail Federation is his way of moving off to the next stage in his career. The reality is that being CEO of JCP is easily two-full time jobs, and one of the most challenging roles in Corporate America. JCP’s board had to approve these outside assignments, and we can’t imagine that they’d do so if they thought he was going to be a long-timer.”
More bluntly, the analysts say if Ullman isn’t heading for the exits, he should be shown the door:
“The answer here is for Ullman to jump ship (or get pushed off). The Board has to take action. The company needs a permanent leader. Ullman already made good progress to stabilize the company. We’ll give him that. Seriously. Golf clap for Mike. But it’s time for the next phase of JCP, and he’s not the guy to lead. Not by a long shot. “
Hedgeye goes on to say that if the company installs a new “powerful and appropriate leader,” the firm would support the company “until the cows come home, because all of our research tells us that the value is there”.
In response to the write-up, JC Penney’s media relations department told News 8, “We do not comment on rumor or speculation.”
Meanwhile, many experts are saying the company’s plan to shutter 33 stores and shed 2,000 jobs won’t be enough to save the company. Officials hope the move will save more than $65 million annually.
“I have them running out of cash again even with all the infusions in (the third quarter) of ’15 unless they get a big acceleration in sales,” said Rick Snyder, a senior retail analyst for the Maxim Group in New York. “Between now and then, I think they need another two billion (dollars in sales) or 16 percent increase.”
Snyder said it would be “heroic” if the company met those expectations.
“I have seen smaller retailers do it, but I have never seen one that had $17 billion in sales turn it around,” Snyder said.
Snyder said layoffs and the shuttering of more stores are a “very real possibility.”
You can read the full note from Hedgeye here.