The first is the recently ended Talbot’s saga under the leadership of Trudy Sullivan. In 5 years this CEO oversaw a race to the bottom of a highly regarded mature/professional women’s apparel retailer. Stock plummeted from $22 to $1.50/share, while she received bonuses every year. In mid-2012, Talbot’s was purchased by a private venture equity firm, Sycamore Partners, for $2.75/share, or somewhere within the range of $197- $369Million on sales of $1.4Billion! This represents the lowest price to sales ratio ever paid for a retail company…. in history!
Apparently unable to exist without the kind of leadership that got them there, after resigning as CEO in December of 2011, the same Trudy Sullivan remained as one of the board’s negotiators. The result: Shareholders received $2.75/share - 10% less than the $3.05 offered in early 2012 or $2.95/share originally offered in 2011. As Motley Fool said, “That's right, in true George Costanza fashion, they held out for less money!”
Speaking of less money, the other story opens with Yahoo Finance reporting JC Penneys made it to the top of the most hated companies in the U.S. This is the JC Penney saga under ex-Apple president, Ron Johnson. 2012 annual sales have fallen by 24.8% to $12.98 billion and the stock has plummeted from near 62% to around $15/share. JCP is now valued at $3.3 billion, down from almost $8 billion last year.
When hired Johnson reportedly bought $50,000,000 in shares at just under $30/share. Although this was both pro-Johnson faith and a pro-Johnson/JCP 6 year equity gesture, why would any individual want to lose $25,000,000+, even on paper? For that matter, how many could? We will have to wait and see if his strategy works. So far it doesn’t appear to have been well designed, unless the plan was to lose $Billions!
An accompaniment to the (so far) failing retail strategy was the expected ousting of Michael Theilmann, the former Exec. VP and Chief HR and Administrative Officer. As a follower of JCP, one of the bright spots within JCP’s recession performance – where most retailers performed poorly - was the noticeable upgrade in positive, helpful and smiling floor and management people.
Where these apparently successful People policies will go under Dan Walker, new CTO and former Apple CTO with Steve Jobs and Ron Johnson, is only one of the sagas to be played out. As of this post, JCP will have shed 25,000 people since Ron Johnson took over. Apple products are the most highly esteemed and sought after tech products in the world. New products and upgrades create a stampede of interest. This is not the retail apparel and department store world. Only time will tell if the Johnson and/or Walker strategies will be successful.
Next: Why do Strategies Fail?
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