J.C. Penney (OTC:JCPN.Q) has been looking for a new chief since late May, when former CEO Marvin Ellison decided to step down to take the top job at Lowe's. Since then, the struggling department store chain has suffered additional executive departures -- including CFO Jeff Davis just a few days ago. Given that J.C. Penney is far from being a healthy business, it became critically important for the company to conclude its CEO search as soon as possible.
Fortunately, the board of directors just picked a new chief. On Tuesday, J.C. Penney announced the appointment of Jill Soltau as CEO, effective Oct. 15. She faces a tough task in the next few years, but she appears to have the skills that could enable her to turn the company around.
J.C. Penney makes its choice
When J.C. Penney reported its second-quarter results back in August, Chairman Ronald Tysoe stated, "The [CEO search] process is going well and the Board has met with highly qualified candidates who have expressed a strong desire to become the next leader of JCPenney." It took another month and a half to make a final decision to hire Jill Soltau.
For the past several years, Soltau has been the president and CEO of crafts retailer Joann Stores. However, the vast majority of her three decades of experience in retail has been at mid-price department-store chains similar to J.C. Penney.
Before taking the helm at Joann Stores, Soltau was a top executive at Shopko, a regional chain of smaller department stores. She served as president for her last two years there, following four years as the company's chief merchant.
Her previous experience also includes stints as a senior executive at Sears Holdings and Kohl's in areas including merchandising, planning, and private brand management. Soltau began her career at Carson Pirie Scott, a Midwestern department-store chain that folded earlier this year in conjunction with the bankruptcy of Bon-Ton Stores. According to the press release:
"Jill stood out from the start among an incredibly strong slate of candidates," said Paul J. Brown, JCPenney board director and chairman of the search committee. "As we looked for the right person to lead this iconic Company, we wanted someone with rich apparel and merchandising experience and found Jill to be an ideal fit. Not only is she an established CEO and former chief merchant, her depth of experience in product development, marketing, e-commerce and store operations have been an important basis for the turnaround work she spearheaded at prior companies."
The board's optimism seems warranted
J.C. Penney's board seems genuinely excited about landing Soltau as the next CEO. On paper, at least, she checks all the boxes for what the company needs right now.
In recent years, J.C. Penney's biggest problem has been that too much merchandise has failed to resonate with customers. This has caused steady margin erosion. Poor performance in this area made former CEO Ellison's decision to eliminate the chief merchant role in late 2017 look particularly suspect.
Soltau's experience as a chief merchant and in other high-level merchandising roles means she should have the skills to fix J.C. Penney's apparel business. She also probably has the right connections to bring in capable deputies to lead the merchandising organization.
It's too late for Soltau to make significant changes before the 2018 holiday season. But she will be faced with some big decisions in 2019, including how to evolve J.C. Penney's apparel franchise and whether to continue the move into new product categories like appliances, toys, and baby gear that was spearheaded by Ellison. The survival of one of America's most iconic retailers may depend on her actions.