NEW YORK J.C. Penney Co. has hired an executive from the mac-and-cheese world to reconnect with its middle-income shoppers.
The beleaguered department store on Monday named Kraft Foods Inc. executive Debra Berman as senior vice president of marketing to help revitalize the struggling brand, filling a void in the company that remained for 14 months.
Penney is trying to win back customers who fled during a transformation plan spearheaded by the chain's former CEO, Ron Johnson, that backfired and led to massive losses and sales declines.
Berman, 45, who has worked for Kraft since 2009, served as vice president for marketing strategy and directed global brand strategy for all of the Kraft-owned brands, including Velveeta, Philadelphia cream cheese and Kraft macaroni and cheese.
J.C. Penney, which is based in Plano, Texas, said Berman joins the company's executive board and will report directly to CEO Mike Ullman III. The appointment took effect Friday.
The appointment, however, did little to boost investor confidence. Shares fell more than 3 percent, or 46 cents, to close Monday at $13.82.
The stock has been down 30 percent since January 2013 and has lost nearly 70 percent of its value since early 2012, when investor bullishness about Johnson's turnaround plan pushed shares up to $43.
Ullman is trying to stabilize the business by bringing back basic merchandise and more frequent sales that were eliminated by Johnson in a failed bid to attract younger, hipper customers.
However, analysts say that while traffic is improving as a result of stepped-up discounts and the return of brands such as St. John's Bay, there has been no evidence of a turnaround yet as the company heads into the critical back-to-school shopping season.
Even the home furnishings area, which was Johnson's project and features a slew of trendy names such as Jonathan Adler and Michael Graves, has failed to resonate with shoppers, analysts say.
Penney was counting on the new home section, launched this spring, to reinvigorate customer traffic, but expensive items like $3,000 sectional couches have turned off its middle-income shoppers.
On Penney's website, home merchandise is being discounted anywhere from 20 percent to 50 percent.
Deborah Weinswig, an analyst at Citi Research, believes the lack of a full-scale management team is holding the company back.
"We do not think it is realistic to expect business to improve without a full management team and turnaround plan in place," Weinswig said in a note published last week. "(The company) is operating with a 'Swiss cheese' executive team, and we think the company has had a difficult time finding talent."
Erik Gordon, a business professor at the University of Michigan, agrees that Penney faces challenges.
"(Berman is) a well-respected marketer, but can she sell blouses in malls?" he said. "At least, given Berman's background in the food business, she won't repeat the mistake of being too hip," Gordon said.
Penney amassed nearly a billion dollars in losses and its revenue dropped 25 percent for the fiscal year that ended Feb. 2 in the first year of the failed transformation strategy.
Losses and sales drops continued into the first quarter, as the shadow of Johnson's legacy remained. Penney is expected to report second-quarter results Aug. 20.
"We do not think it is realistic to expect business to improve without a full management team and turnaround plan in place." Deborah Weinswig, Citi Research analyst