The sudden departure of Ellison is the second straight time Penney's has had to deal with unexpected C-Suite turmoil. But many initiatives, notably new apparel lines fell flat and Penney had trouble planning inventory needs, prompting it for instance a year ago to sell much merchandise at clearance prices and decimating gross margins. Fiat Chrysler gained 1.9 percent to $22.77.
Sales decreased 4.3 percent to $2.6 billion compared to $2.7 billion for Q1 2017. Software maker Adobe Systems climbed 2 percent to $242.77 after it agreed to buy Magento Commerce for $1.68 billion. Penney, which operates in many declining malls, never came close to that level of revenue again despite the potential to win some market share from the ongoing sales implosion at mall neighbor Sears.
However, the retailer's overall first quarter was disappointing, with comps rising only 0.5 percent, and the company posting a $69 million net loss. "We thank Marvin for his leadership and dedication, and wish him much success in his next endeavor". Ellison, board chair and chief executive, nearly certainly knew about this when he was on the earnings call.
US stocks are mostly higher Tuesday as gains for banks and energy companies mostly cancel out losses for industrial companies and retailers. "Those retailers who can offer their customers a value while providing the best in-store and online experience will be winners. And as a company J.C. Penney plans to be one of those winners".
"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.
Investors reacted swiftly, sending JC Penney shares down 6 percent in Tuesday morning trading. The company recently cut its profit forecast, blaming cool weather for weighing down sales.
"The turnaround program that Ellison put in place at JCPenney has partly delivered but is still far from complete". The Russell 2000 index of smaller company stocks fell less than 1 point to 1,636 after closing at record highs the last four days. While Ellison will remain a director and CEO through June 1, he will step down from his position as chairman of the board effective immediately.