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What: Shares of J.C. Penney (NYSE: JCP ) sank 12% today, after the embattled retailer ousted CEO Ron Johnson.
So what: The board of directors rehired former CEO Mike Ullman to replace Johnson, raising plenty of uncertainty over its competitive strategy going forward. Johnson's removal suggests that the current quarter is going to be another brutal one for J.C. Penney, giving short-term-oriented investors little reason to stick around.
Now what: Given J.C. Penney's dwindling cash balance, Ullman will need to stop the bleeding rather quickly. "[M]y plan is to immediately engage with the company's customers, team members, vendors, and shareholders, to understand their needs, views, and insights," Ullman said in a statement. "With that knowledge, I will work with the leadership team and the board to develop and clearly articulate a game plan to establish a foundation for future success." With the threat of bankruptcy as a very real possibility, however, risk-averse Fools would do well to watch from the sidelines.
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