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Did J.C. Penney Just Pick Its Future CEO?

By Dan Caplinger - Sep 23, 2015 at 1:40PM

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Replacing its chief merchant is just the latest in a series of big executive moves and has some succession planning implications.

CEO Marvin Ellison makes a key new appointment. Image: J.C. Penney.

Department-store retailer J.C. Penney (JCPN.Q) has a long history of serving consumers, and after having suffered through a tough period during and after the 2008 economic recession, the company has made a long series of strategic decisions designed to try to help regain its lost momentum. With CEO Marvin Ellison having taken his leadership role just last month, Penney investors have hoped for decisive action. This morning, they got some of what they wanted, with Penney announcing that it would replace chief merchant Elizabeth Sweney with John Tighe as of the beginning of October. The move has some definite implications for the retailer's future strategic direction as J.C. Penney looks to advance on multiple fronts. Let's take a closer look at today's move to find out exactly what it means for J.C. Penney and its shareholders.

What Ellison sees in Tighe
John Tighe has been involved in J.C. Penney for more than a decade, and during that time, he's had an influence on a wide swath of the retailer's overall operations. As Ellison said in the company's press release announcing the move, "John is an extraordinary merchant who in his career has curated some of the most high-performing brand portfolios in retail." Most recently, Tighe has served as a senior vice president overseeing the men's apparel area, which Penney has identified as a potential growth opportunity as the retailer aims to round out its customer base by increasing its appeal to male shoppers. Yet over time, Tighe has gained familiarity with just about every aspect of Penney's operations, having managed the retailer's home-products division from 2010-2012 and previously having been involved in apparel categories including junior sportswear and missy casual.

Yet a larger part of the move might well have to do with Tighe's role in helping to bolster J.C. Penney's omnichannel initiatives by increasing its online presence. Ellison credited Tighe with "leading the growth of," and he has repeatedly emphasized the need for Penney to catch up with its competitors in making it easier for online shoppers to get the products they want while also looking to bring them into stores through services like same-day, in-store pickup for online orders. By choosing Tighe, Ellison appears to be rewarding efforts to invigorate the e-commerce channel as part of its overall omnichannel strategy.

Avoiding controversy
From the announcement, it appears that Penney has avoided any obvious tension from the transition. Ellison praised Sweeny for her longtime efforts as chief merchant, saying that "the progress that our company has made would not have been possible without [her] leadership, dedication, and expertise." Sweeny will also continue to work in an advisory role, giving Tighe the benefit of her 16 years of experience at Penney.

That smooth transition is something that other retailers have sometimes struggled to achieve. Earlier this year, for instance, Target (TGT 4.32%) made an abrupt change in its chief merchant position, moving out company veteran Kathryn Tesija. Some industry analysts saw the move as controversial, in light of the role that she and other upper-level executives had played in persuading Target's board of directors to replace former CEO Gregg Steinhafel. Some even believed that Tesija might be in line to lead the retailer at some point. Like Sweeny, Tesija also stayed in an advisory role, but current CEO Brian Cornell's move suggests at least the possibility of continued disagreements about strategic direction. That appears not to be the case at J.C. Penney.

Indeed, the appointment of Tighe seems like a possible move toward an eventual replacement for Ellison. At 46, Tighe has plenty of time to broaden his already extensive familiarity with the retailer's operations, and as Ellison said, "John's positions over the last several years demonstrate the importance of developing high potential leaders for the benefit of succession planning."

Clearly, replacing a chief merchant is far from a magic bullet to ensure J.C. Penney's future success. Nevertheless, as Ellison aims to make his mark on the retailer in his early days as its chief executive, investors should hope that Tighe can jump into his new role and immediately take action to influence the course of the key upcoming holiday season. If he can, then even bigger and brighter things could be lie down the road for the new chief merchant.

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