Allen Questrom to Take Helm at J.C. Penney
Barneys chief Allen Questrom--an executive with a history of turning around troubled department stores--was named chairman and chief executive of J.C. Penney Co. on Thursday.
The news was cheered on Wall Street as J.C. Penney shares jumped about 16%, and analysts expressed optimism that Questrom could mend the nation’s No. 2 department-store chain.
Questrom, who is credited with leading upscale retailer Barneys New York and industry giant Federated Department Stores out of bankruptcy, will take over the Plano, Texas-based retailer Sept. 15. He replaces James Oesterreicher, who resigned in May after J.C. Penney shares lost more than half their value during his three years in charge.
“I think this is a brilliant choice,” said Jeff Edelman, a retail analyst for New York-based PaineWebber, who has known Questrom for more than 20 years. “If anyone has the capacity to take Penney’s to the next level, I think he can.”
Questrom, 60, may not be able to hike the stock value back up to $75 a share--its value in July 1998--but he has the potential to raise it significantly, Edelman said. J.C. Penney shares closed Thursday at $17.25, up $2.38 on the New York Stock Exchange.
The change in leadership comes as the retailer struggles to get its business back on track. J.C. Penney has closed many under-performing stores, sold some noncore businesses, overhauled merchandise buying and hired more outside executives.
With Questrom’s appointment, more cuts may be on the way.
“I wouldn’t be surprised if before the end of this year they announce a major store-closing program,” said Brian James, an analyst at Loomis, Sayles & Co., which owns retail shares.
J.C. Penney employs more than 290,000 people in the United States and Latin America and had fiscal 2000 sales of $32.5 billion.
Questrom said he will take some time getting to know the company before moving to boost its brand image and restore its financial performance.
“It’s an interesting challenge,” Questrom said. “I get a lot of motivation out of [turnaround challenges].”
Analysts said he may look to hire someone to head the retailer’s Eckerd Drug Store chain. The division had a $30-million loss in its first quarter ended April 29, mainly because of inventory liquidations at the shuttered stores. J.C. Penney has said it plans to create a tracking stock later this year for Eckerd.
The new CEO could also push for management changes, such as hiring more executives from outside the company, analysts said.
“The problem with J.C. Penney has been a very insular management,” James said. “With Questrom at the top, more people would be likely to join what could be considered a winning team.”
Questrom’s resume includes a nine-year stint as chairman and CEO of Federated Department Stores. While at Federated, Questrom also held CEO positions at Bullock’s in Los Angeles and Rich’s in Atlanta. He was also president of Neiman Marcus. Bullock’s locations were converted into Macy’s stores in 1995.
In May 1999, he became chairman and CEO of New York-based Barneys, which had fiscal 2000 sales of $367 million.
Barneys said Questrom would continue as its chairman and would be in charge of finding his successor, choosing from “a short list of potential candidates.”
A number of top jobs at large U.S. retailers have been up for grabs in recent months. Discount chain Kmart Corp. recently named Charles Conaway, a former president and chief operating officer of the CVS Corp. drugstore chain, its chief executive. Sears, Roebuck & Co., the No. 2 U.S. retailer behind Wal-Mart Stores Inc., is also shopping for someone to fill its top post.
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Bloomberg News was used in compiling this report.
