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In One Chart - May 22, 2018

In One Chart: Ellison Leaves JCP for LOW, Did Insiders See It Coming?

It was announced this morning that Marvin Ellison will be leaving his role as CEO of JCPenney (JCP) in favor of the top role at Lowe’s (LOW).

Ellison has considerable experience with home improvement stores, serving as Home Depot’s (HD) EVP of U.S. stores for part of his 12 year tenure with the company.

The chart below shows how insiders have been tracking recently. JCPenney insiders have been decreasing their positions in the company, while Lowe’s insiders have done the opposite. All this ahead of today’s announcement of Ellison’s departure.

Ellison had been leading JCPenney through a turnaround since he took the role in 2014 with moderate success. His plan revolved around a shift to appliance sales, as opposed to the retailer’s hallmark clothing business. The plan was a response to increased pressure from online sellers as well as moves from similarly priced competitors Kohl’s (KSS), Target (TGT), and Walmart (WMT), all of which have recently made strategic moves in apparel.

On the news of Ellison’s switch, Lowe’s shares rose nearly 2% but have since leveled; at the same time, JCPenney shares sold off overnight and are currently down more than 5% on the day. Investors seem to have taken Ellison’s resignation as a sign that the turnaround plan for JCPenney was no longer feasible.

In its most recent quarter, JCPenney lost $69 million. A spokesperson for the company says they were not aware of Ellison’s intention to depart JCPenney as of their most recent earnings release.

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