Market Overview

How Marvin Ellison Used The Home Depot Model To Transform JC Penney

How Marvin Ellison Used The Home Depot Model To Transform JC Penney
Related HD
Housing Sector Preview: A Strong Start To 2017
PreMarket Prep Recap, March 20: Major Volatility At Friday's Close And Why Disney Is In For A Big Quarter
Retirees: How To Protect The Principal Of Your Dividend Portfolio (Seeking Alpha)
Related JCP
Five Below Up 11% After Solid Q4 Beat; Loop Capital Reiterates A Buy
What Happens To A Stock When An Activist Liquidates A Position?
J.C. Penney Appears To Take A Step Back (Seeking Alpha)

The once struggling department store J C Penney Company Inc (NYSE: JCP) is now expected to post a $1 billion profit this year — the first time doing so since 2012.

So, What Happened?

According to Bloomberg Gadfly's Shelly Banjo, the first step of JC Penney's turnaround was "anchoring" investor expectations. This is exactly what its CEO Marvin Ellison did when he told investors not to count on a return to 2007 levels when it notched $19 billion in annual revenue. Rather, investors can expect to see growth through new initiatives, including beauty products, appliances and home goods.

Banjo added Ellison's strategy and turnaround plan is based on a similar strategy he helped oversee at his prior employer, Home Depot Inc (NYSE: HD), where he spent 12 years and most recently served as head of its U.S. stores.

Banjo stated that Ellison helped forge "one of the most successful turnaround projects in retail history" at Home Depot after it was "battered" by the 2008 financial crisis.

Related Link: JC Penney Q2 Earnings Cheat Sheet

"It completely transformed its business by halting store expansion, shedding unprofitable businesses and focusing on growth areas such as private brands and e-commerce," Banjo wrote.

Ellison is not only sticking with the same macro strategy, but he is implementing micro-strategies as well. For instance, Ellison wants employees to spend 60 percent of their time helping customers rather than the current 40 percent devoted to customer service.

Ellison oversaw the exact same plan at Home Depot and even used the same title in a presentation — "Path to 60/40."

Bottom line, imitation is not only the sincerest form of flattery, but in this case, "it also happens to be a smart strategy."

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Posted-In: Bloomberg Gadfly Marvin Ellison Shelly BanjoAnalyst Color Management Top Stories Media Trading Ideas Best of Benzinga


Related Articles (HD + JCP)

View Comments and Join the Discussion!