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JCPenney CEO leaves the company, signaling death of department stores



 Marvin Ellison
JC Penney's CEO Marvin Ellison is leaving the […]
YouTube / JCPenney


JC Penney's stock market Ellison would be leaving the company to lead home improvement company Lowe's.

Analysts claim that Ellison's sudden departure could be signaled at JC Penney and store stores generally have Amazon-proof.

"Ellison's exit is unlikely to be optimistic about the future prospects of JCPenney and the grass as being green at Lowe's," Neil Saunders of GlobalData Retail said in a note to clients on Tuesday.

Ellison, who became the CEO of JC Penney in 2015 after a 12-year stint at Home Depot, was tasked with bringing the department back from the brink of disaster. The chain's former CEO, Ron Johnson, tried to make the store more upmarket but alienated core customers in the process, leading it to a $ 1.42 billion operating loss in 2013 and leaving it drowning in nearly $ 5 billion of debt.

With Ellison at the helm, JC Penney has undergone a major turnaround and sales have been stabilized. Sears' declining sales, expanded its private-label collection, and growing its Sephora pop-ups to more stores.

But the store has been crippled by a heavy debt load and has struggled to find its place in the retail landscape.

"JC Penney has not created an experience that solidifies a place in consumers' shopping habits," Kathy Gersh, Kotter International founder, told Business Insider. It was once the only place to shop in a town. "

Meanwhile, home-improvement stores have become one of the few spots that are vulnerable to the threat of Amazon. Amazon Localization (Amazon): Amazon Local Services (later renamed Amazon Home Services) never took off, so this is harder to replicate online.

Shoppers are able to buy home-improvement products in stores and to talk to sales assistants before they do so.
                    

        

    

A recent survey done by the Bank of America showed that the majority of the 1,000 millennials surveyed "overwhelmingly purchase most or all of their home improvement products in-store," analyst Elizabeth Suzuki said.

64% said Home Depot was their top choice for home-improvement shopping, while 53% preferred Lowe's.

A store in crisis

The news of Ellison's departure comes at a tumultuous time for the department store, which was one of the few retailers to report the weaker-than-expected sales during the first quarter of 2018.

"This is arguably the most challenging and competitive retail market we've seen in over 50 years," Ellison said in a call with investors less than a week ago.

He added: "Retail in the US is a multi-trillion-dollar industry, and we believe it could be multiple winners. And as a company, JCPenney plans to be one of those winners. "
                    

        

    

But without Ellison at the helm, it finds itself in a much weaker position, at least in the short term.

"But certainly, he has not finished the job," Gersch said.


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