J.C. Penney's CEO is leaving the company to become the top executive at Lowe's.
The announced departure of Marvin Ellison on Tuesday sent shares of the struggling department store chain tumbling to an all-time intraday low. Shares fell 7 percent, to $2.28 each. The company's stock first hit public markets in 1978.
Shares of Lowe's Cos., which has struggled to keep pace with rival Home Depot, rose more than 4 percent. Ellison spent 12 years at Home Depot Inc. before he joined J.C. Penney.
J.C. Penney has five stores in the Indianapolis area and about 850 overall. Lowes has about 15 area stores and more than 1,800 locations overall.
Ellison, 53, will step down on June 1 and four top executives will share the day-to-day operations until a new chief executive is appointed, J.C. Penney said Tuesday.
The CEO, who has been at J.C. Penney since 2014 and assumed the top job a year later, has struggled to turn around the retailer even amid improving consumer trends in the U.S. He’s exiting after a disappointing set of results last quarter that revived concerns that the big department-store chain isn’t nimble enough to compete.
Meanwhile Lowe’s investors welcomed the news. It might be because Ellison has a history in home improvement, having spent more than 12 years in leadership roles at Home Depot Inc. Many of the improvements activist investor D.E. Shaw & Co. has called for at Lowe’s, including making stores more efficient, are strategies Ellison helped enact during his career at Home Depot.
Since joining J.C. Penney, Ellison has pushed the retailer to improve its online experience and supply chain. Those are also two areas that the activist investor said needed be addressed at Lowe’s.
J.C. Penney’s shares have slipped 70 percent since August 2015, when Ellison took over the troubled department store chain. He’s faced stiff industry headwinds, struggling to turn the business around as more and more shoppers move online. The company recently cut its profit forecast, blaming cool weather for weighing down sales.
Sales at J.C. Penney fell 4.3 percent, to $2.58 billion, in the first quarter when compared to the same quarter of 2017. The company closed 141 stores over that period. Same-store sales, which considers stores open at least a year, rose just 0.2 percent.
At Lowe’s, Ellison will replace Robert Niblock, 55, who had previously announced his intention to retire. He will take on the role on July 2, Lowe’s said.
"Ellison's exit will raise speculation that he is not particularly optimistic about the future prospects of (Penney) and sees the grass as being greener at Lowe's," wrote Neil Saunders, managing director of GlobalData Retail in a note. "Indeed, exiting before his plan is complete is a tacit admission that he may not be able to deliver what investors are looking for. This will be particularly damaging to staff morale, especially because Ellison is a popular leader who has connected well with almost everyone he works with."