J.C. Penney hired Apple's retail chief — he lost $1B in 17 months and was fired

J.C. Penney was a struggling mid-market department store when it hired Ron Johnson as CEO in November 2011. Johnson was a retail superstar — he had built Apple's wildly successful retail stores and previously led Target's merchandising. The board and hedge fund investor Bill Ackman expected him to do for JCPenney what he had done for Apple: transform the brand into a destination.

Johnson's strategy was a radical break from the company's past. He eliminated the 590 annual promotions and coupons that JCPenney's core customers relied on, replacing them with 'fair and square' everyday low prices. He redesigned stores with a central service station inspired by Apple's Genius Bar, introduced branded shops-in-shops (Martha Stewart, Joe Fresh, Liz Claiborne), and removed the clearance racks. The strategy was designed to attract younger, more affluent shoppers.

It did not work. JCPenney's core customers were discount-dependent middle-class families who shopped during sales. Without coupons, they stopped coming. The new affluent customers never arrived. Sales fell 25% in 2012, and the company posted a net loss of $985 million. Johnson was fired in April 2013 after 17 months. The company spent years recovering and filed for bankruptcy in 2020.