J.C. Penney Co. named outgoing Saks Inc. (SKS:US) Chief Executive Officer Stephen Sadove to its board, bringing in a luxury-retail executive to help CEO Mike Ullman turn around the department-store chain.
Ullman reclaimed the top job in April on an interim basis to stabilize J.C. Penney and help it rebound from ex-CEO Ron Johnson’s failed transformation. Sadove is set to leave Saks when its acquisition by Hudson’s Bay Co. (HBC) is completed. That’s also when he will join J.C. Penney’s board, the Plano, Texas-based chain said today in a statement.
His appointment signals “that he’s a potential successor to Mike Ullman,” said Liz Dunn, an analyst at Macquarie Group in New York. “He’s very strategic. He’s good at marketing and cost containment. He’s got the department-store experience. He’d be an excellent candidate.”
J.C. Penney said yesterday that its sales decline slowed in September and that the improvement will last through the end of the year. The company is in the midst of a turnaround after sales plummeted and losses piled up during and after Johnson overhauled almost every aspect of the chain in an attempt to appeal to younger and wealthier shoppers.
J.C. Penney rose (JCP:US) 1.5 percent to $7.89 at the close in New York. The shares have slumped 60 percent this year, the worst performance in the 10-company Bloomberg U.S. Department Store Index.
Sadove, 62, didn’t respond to requests for comment. Kristin Hays, a spokeswoman for J.C. Penney, declined to comment.
While Saks is a smaller chain of about 100 stores, compared with 1,100 for J.C. Penney, Sadove has experience with a similar type of customer in Saks’s outlet locations, Dunn said. Sadove, who became CEO in 2006, expanded the OFF 5TH stores to more than 60 as a way to drive sales when growth at its full-price locations stalled.
“He’s managed complex businesses throughout his career,” Dunn said. “And the off-price business means he has experience with value positioning.”
Sadove is the second director to join J.C. Penney’s board since Ullman came back. Ronald Tysoe, a former vice chairman of Federated Department Stores Inc., now Macy’s Inc. (M:US), was named in August as activist investor Bill Ackman resigned from the board after sparring publicly with fellow directors over how to reverse the sales slump.
J.C. Penney also said today that Geraldine Laybourne, a director since 2009, will step down from the board.
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