JC Penney shares tumble after company removes president Michael Francis

Last month JC Penney reported a $163m quarterly loss and a 20% drop in sales. Photograph: David Pardo/AP

Investors have panicked following JC Penney's decision to ditch a leader player in the "dream team" planning an up-market makeover for the troubled retailer.

Shares in the company fell 8.6% to $22.25 after the news that the company had ousted president Michael Francis. The share price fall came even as US markets were rising on better news from Europe and hopes that the Federal Reserve would act to stimulate the economy.

The company did not give a reason for Francis's exit Monday, which came just eight months after JC Penney appointed him. He had been hand-picked for his "vision and courage" by Penney's chief executive Ron Johnson, a former Target executive and the man who oversaw Apple's successful move into retail.

Francis, formerly Target's top marketing executive, was a key member of Johnson's self-described "dream team" and his plan to move the 110-year-old company away from its traditional strategy of using sales and deep promotions to draw in customers.

The company dropped most of JC Penney's discounts and switched to offering everyday low prices, month-long sales specials and other deals. Francis was in charge of marketing and efforts to rebrand JC Penney by adding new brands including Ralph Lauren.

But the sales pitch appears to have failed so far. Last month the retailer reported a $163m quarterly loss and a 20% drop in sales. Even internet sales, growing for most of the firm's rivals, dropped, falling 27.9%.

At the time Johnson told analysts the firm had failed to get its new message out. "Not having a coupon in their pocket or in their hand and not understanding the pricing in the store" had damaged sales, he said. Johnson said the company was adjusting its marketing to get its new message across.

Johnson will now oversee merchandising and marketing himself. On Tuesday he said the company's second-quarter sales were showing a "modest improvement" from the dismal start to the year. In an interview with the Wall Street Journal Johnson said he would not back away from the company's new focus. "I think the strategy is working well," he said.

Analysts were less enthusiastic. "Since Ron Johnson was unlikely to fire himself due to early turnaround missteps, he appears to have decided to swing the axe over the head of the person he handpicked as president of JC Penney," Brian Sozzi, an analyst at NBG Productions, said in a note to clients.

"While we do not believe yesterday's announcement changes the long-term vision, near-term implications clearly appear negative and we will be monitoring stores and channel commentary for changes ahead," wrote Matthew Boss, an analyst at JP Morgan.

brian williams patrice o neal patrice o neal wayne gretzky wayne gretzky occupy los angeles occupy los angeles