J.C. Penney CEO’s First Big Move Makes Sense

(Bloomberg Opinion) -- And just like that, this is no longer Marvin Ellison’s J.C. Penney Co.

The department store chain said Wednesday it is going to get out of the business of selling major appliances. With this move, new CEO Jill Soltau has reversed course on a key initiative of Ellison, her predecessor in the top job at the troubled retailer. This decision does have a feel of strategic whiplash, given that Ellison had only embarked on this plan about three years ago. But at this point, I think Soltau is making the right call.

When it was first announced, I thought Ellison’s appliance push made good sense. He spent much of his career at Home Depot Inc., meaning he had loads of experience and expertise in that kind of business. And with Sears Holdings Corp. closing hundreds of stores and looking like a dead retailer walking, it seemed J.C. Penney had some easy market-share pick-up opportunity.  

Unfortunately, it doesn’t seem to have paid off. J.C. Penney’s gloomy comparable sales figures suggest that the appliance business hasn’t exactly been a savior in terms of driving foot traffic. Plus, appliances aren’t as profitable for J.C. Penney as high-margin categories such as apparel and so-called “soft home” goods like sheets and towels. On top of that,  a study by UBS analyst Michael Lasser found that healthier retailers are likely to reap much of the benefit in the appliance category if Sears ends up liquidating. So I don’t blame Soltau for cutting bait. 

J.C. Penney CEO’s First Big Move Makes Sense

By ditching appliances – and also by ceasing to sell furniture in brick-and-mortar stores, another decision announced Wednesday – Soltau can bring fresh focus to sprucing up J.C. Penney’s apparel offering. That is an exceedingly important goal, given its outsize contribution to the company’s sales overall. It’s not that Ellison had neglected apparel; he made commendable decisions such as to expand J.C. Penney’s plus-size and big-and-tall merchandise. But J.C. Penney’s fashion assortment simply doesn’t stack up well to what is on offer at key competitors such as Target Corp. and Kohl’s Corp.

J.C. Penney CEO’s First Big Move Makes Sense

This is apparently just the beginning of Soltau’s overhaul efforts. She is hunting for a CFO and a chief customer officer,  as well as a chief merchant – a role Ellison had eliminated. In a press release announcing dismal holiday results, the company said it would be sharing “information related to future store closings” in late February, a hint that Soltau might be taking an ax to the chain’s huge store footprint – a move I’ve argued would be prudent.

J.C. Penney is in a highly precarious position, so it’s good to see Soltau isn’t wasting any time.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.

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