BUSINESS
06/21/2012 08:33 pm ET Updated Jun 22, 2012

Michael Francis, J.C. Penney Departing President, May Have Tripped On Target Training

Before he was hired as J.C. Penney's president in October, Michael Francis was known for the "Kaleidoscope Fashion Spectacular," one of his most memorable projects at Target.

An event during New York Fashion Week in fall 2010, the Spectacular filled the glass-windowed rooms of the Standard Hotel with 66 dancers performing experimental choreography while lit up by psychedelic LED lights. Models dressed in Target's fall collection paraded in front of the hotel.

Francis told investors at a conference one year later that the event "blurred the lines between haute couture and performance art." The Standard, he said, attracts "a kind of free-spirited clientele who feel it unnecessary to draw the drapes after checking into their room. An underground movement of hipster voyeurs makes a regular pilgrimage to the Standard, which is precisely why we decided to take over the hotel."

But "hipster voyeurs" have not typically been J.C. Penney's customers. On Monday, less than a year after J.C. Penney hired Francis to serve as president of a new team tasked with rebranding the company, the executive abruptly left. Francis had been in charge of J.C. Penney's marketing and merchandising, and reported to CEO Ron Johnson, who worked at Target and Apple before taking over J.C. Penney in November.

Francis' departure is making observers wonder whether J.C. Penney's ambitious rebrand is off-target -- or perhaps resembles its Target competitor too closely.

Since Johnson announced the details of J.C. Penney's new strategy in January, the store has abandoned coupons and sales in favor of daily low prices; released a series of ads with spokeswoman Ellen DeGeneres (created by Peterson Milla Hooks, Target's agency for over a decade); and signed a slew of new edgy fashion lines from designers like Cynthia Rowley and Vivienne Tam.

Later this year, it will begin remodeling stores to create a "Main Street" of branded shops, stores within individual J.C. Penney stores that will house the company's new lines. In May, Target also launched a "Shops at Target" concept featuring products from boutiques in Miami, Aspen, Boston, San Francisco and Connecticut. Target has long been known for its partnerships with designer brands. Architect Michael Graves ended his partnership with Target in February; in May at a presentation to investors, Francis announced that Graves would now be working with J.C. Penney.

Yet so far, the changes haven't helped J.C. Penney. In the first three months of 2012, sales at stores open at least a year plummeted 18.9 percent. In an interview with Women's Wear Daily, Johnson said Francis had left because "the marketing has not resonated with our core customer.”

J.C. Penney's shoppers are different from Target's or Kohl's, said Michael Binetti, analyst at UBS. "J.C. Penney has stores in markets so small that their closest competitors have not built stores there," he said. "I don't think those stores will respond as much to more compelling and contemporary fashion items."

Some question whether the drastic makeover of the J.C. Penney brand came too soon. "The turnaround envisioned in January has not gained traction, and the company has made basic mistakes such as introducing 'branding' marketing before the product/stores had changed," wrote analyst Paul Lejuez of Nomura Securities in a note to clients.

One of Francis' first projects after starting as Target's VP of marketing in 2001 was to "own the color red," the color of the brand's bullseye logo. To get a leg up on Macy's, whose logo is also red, Target took out floor-to-ceiling red ads in subway stations around New York City, including the stop at Herald Square where Macy's flagship store is located.

"We need to feed the cult of Target," Francis said at an advertising conference in 2003. "Everything at Target is filtered through its brand image."

During Francis' tenure at Target, the company executed other buzz-generating events such as docking a Christmas-themed barge filled with merchandise at the Chelsea Piers in New York City; plastering Alpine train cars with its "bullseye" logo without the Olympic Committee's permission during the Winter 2006 games; and hiring magician David Blaine to escape from chains in Times Square and reappear at a Target in Brooklyn.

"In both the U.S. and in Canada we will continue seeking innovative ways to create buzz and to generate excitement through bold initiatives and attention-grabbing stunts," Francis said at the 2011 investor conference.

While J.C. Penney did not offer an explanation in its brief statement announcing Francis' departure, many shoppers have said the store's new, cooler vibe wasn't winning them.

"I have been a J.C. Penney shopper since the early 60s, which is when I got my first credit card," said Monica Matthews of Asheville, N.C. "Since the new types of advertisements, I have not bothered to make the trip to the store. I am disappointed with the 'new' way the CEO has decided to reinvent the company. If I wanted or liked to shop at Target, I would."

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