OMG, J.C. Penney Co. (JCP) - Get Report !

Its leader has bailed when that's about the last thing the struggling department store chain needs. 

"It can't be anything less that an 'Oh my God!' for the brand," consultant Bob Phibbs, known as the Retail Doctor, told TheStreet on Tuesday, May 22. "It's a real kick."

Marvin Ellison, who had been J.C. Penney's CEO since August 2015, has been tapped to head home improvement chain Lowe's Cos. (LOW) - Get Report as CEO and president, and is leaving the top post at J.C. Penney immediately.

Shares plunged 10% in pre-market trading on Tuesday when the news was announced, and finished down over 6% to $2.35. Year to date, shares are down almost 27% 

"Exiting before his plan is complete is a tacit admission that he may not be able to deliver what investors are looking for," wrote GlobalData Retail managing director Neil Saunders in a note on Tuesday, May 22. It also suggests, added Saunders, that Ellison was "not particularly optimistic about the future prospects of JCP." 

Ellison had brought stability to the 116-year-old company that seems to have lost its identity. His turnaround was in process as he tested different strategies, such as recently offering appliances for sale. The company was also hoping to scoop up customers from Bon-Ton stores, which filed for Chapter 11 last year and is liquidating inventory.

"We believe Marvin Ellison's strengths in appliance execution and leadership skills will be difficult to replicate," wrote Cowen & Co. analyst Oliver Chen in a note on Tuesday. 

Under Ellison, though, the company hadn't solved key strategies for retail success -- getting the right apparel mix, especially important since clothing is its largest category, and driving full-price sales -- wrote analyst Bill Dreher of Susquehanna Financial Group, in a recent note. Those misses showed in 2018's first-quarter earnings, which were reported on Thursday, May 17. 

For the quarter, Penney posted an adjusted loss of 22 cents a share on revenue of $2.58 billion. The FactSet consensus was for a loss of 23 cents and sales of $2.61 billion. Same-store sales were up 0.2%, missing FactSet's consensus of 2.1% growth. While the company expected full-year same-store sales from flat to up 2%, it anticipated adjusted earnings per share to be a loss of 7 cents to earnings of 13 cents. The previous guidance was for earnings of 5 cents to 25 cents.

Image placeholder title

In the wake of Ellison's departure, the board of directors elected current lead independent director Ronald W. Tysoe as chairman and created an Office of the CEO, which includes Chief Financial Officer Jeff Davis, Chief Customer Officer Joe McFarland, Chief Information Officer, Chief Digital Officer Therace Risch and Executive Vice President of Supply Chain Mike Robbins.

These leaders will share equal responsibility for the company's day-to-day operations until a new CEO is appointed, the company said in a press release. The board also formed a search committee to conduct a search for Ellison's replacement, which according to Chen, could take five to six months.

Phibbs called the team approach "just silly, because teams don't lead with a unity of vision. Individuals do."

Even worse, Ellison's departure marks the third high-profile CEO to leave Penney in seven years. Ellison was preceded by Myron E. Ullman III, who was in the spot twice, the last of which was from April 2013 to July 2015. And Ullman took over after Ron Johnson, who had come from a successful run at Apple (AAPL) - Get Report , was fired in 2013. Johnson's tumultuous tenure was marked by an unsuccessful rebranding effort and a stock price plummet of 51%.

And then, there's this: Ellison's exit is "damaging to staff morale," wrote Saunders, "especially because Ellison is a popular leader who has connected well with almost everyone he works with." 

Apple Inc. is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL? Learn more now.