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Penney CEO's Challenge: Is It Even Fixable?

Instead, Penney's loyal shoppers went in search of deals elsewhere, and the chain didn't attract the younger and more affluent shoppers that Johnson coveted. Now the 1,100-store chain is burning through cash. In the past year, the company lost nearly a billion dollars and saw its revenue tumble by nearly $4.3 billion to $12.98 billion. Customer traffic dropped 13 percent. Steep sales declines have continued, say analysts, even though Johnson added back some sales events and coupons early this year.

Some speculate that Ullman may ditch the everyday price strategy and instead ramp up the return to discounting and coupons to get shoppers back in the stores. But that will still be an expensive move. Michael Binetti, an analyst at UBS Investment Research, and others believe that Ullman also will temporarily suspend the rollout of the mini-shops, which started late last year and feature such brands as Joe Fresh and Levi's.

When the overhaul of its home area is completed next month, the company will have carved up 30 percent of its store space into mini-boutiques. But after that, Ullman is expected to pull back the pace of the rollout as Penney tries to conserve cash. That means that some suppliers who expected to have mini-shops could be left in the lurch.

Ullman also will have to find ways to boost employee morale amid severe cuts that have slashed the work force by nearly 30 percent. As of February, Penney employed 116,000 full- and part-time workers, down from 159,000 a year ago.

Whatever Ullman ends up doing, analysts expect him to be thoughtful and deliberate in his moves. That's a big difference from Johnson, who was criticized for not testing his strategies in a few stores, particularly the pricing plan.

In a statement released by Penney on Monday, Ullman said he plans to immediately "engage with the company's customers, team members, vendors and shareholders, to understand their needs, view and insights" and then work with the management team and the board to develop a game plan.

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