While JC Penney has named Ronald Tysoe as the new chairman, the responsibilities of the CEO will be shared among the top executives until a successor is identified, which according to experts will be a tough task considering the company’s poor fiscal condition. Ellison will join Lowe’s as president and chief executive officer, effective July 2, filling the vacancy created by the retirement of Robert Niblock.
It is believed the abrupt departure would have a negative impact on the company’s ongoing turnaround efforts
Ellison came to JC Penney after a 12-year stint with Lowe’s arch-rival Home Depot (HD), where he held various leadership positions. He was instrumental in transforming JC Penney into a home appliances retailer from an apparel store operator. He also initiated an extensive restructuring program with a focus on massive store closures and layoffs, after becoming the CEO in 2015.
The efforts, combined with a revamped e-commerce platform, helped JC Penney improve its finance significantly. However, the reforms were not sufficient to bring back the lost momentum to the company’s business, which continued to face strong headwinds from growing competition and widespread adoption of online shopping among customers.
The task that awaits Ellison at Lowe’s is equally challenging, though its operating performance and debt level are much better compared to JC Penney. In general, the long-term outlook for the American department store sector is not very encouraging, with the primary risk being the onslaught of multichannel retailers like Amazon (AMZN) and Walmart (WMT).