On Monday after the market closed, JC Penney (JCP) announced that President Michael Francis was leaving. The company offered no explanation for his departure, but there isn’t really any explanation that could lessen the damage, writes Nomura analyst Paul Lejuez.
Among other problems, the sudden change could affect the company’s relationship with vendors. “We believe he, along with Ron Johnson, played a large role in signing up new brands/vendors, so his departure will likely cause some questions in the vendor community.”
The move clearly raises larger questions about the company’s strategy and who takes the blame for recent missteps, writes Lejuez.
“Is Francis taking the blame for marketing or did he lose faith? The turnaround envisioned in Jan has not gained traction, and the company has made basic mistakes such as introducing �branding� marketing before the product/stores had changed. Francis may be taking the blame for the marketing mistakes. Alternatively, maybe Francis is giving up on a turnaround plan he helped create. When he was hired, Francis was awarded 1 million restricted stock units that do not vest (and only one-third) until Nov 2015 � perhaps the date seemed farther and farther away.”
Lejuez lowered his price target to $26 from $30. JCP shares were recently down 10% at $21.88.
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