Mooreville-based Lowe's announced Tuesday morning that it has named former J.C. Penney CEO Marvin Ellison its new CEO, effective July 2. Ellison succeeds Robert Niblock, who announced his plans to step down as chief executive in late March.
The home improvement retailer called Ellison a 30-year retail industry veteran who brings "significant leadership and operational expertise to Lowe’s." In a separate statement from J.C. Penney, Ellison announced his plans to step down from the department-store chain that he has headed for almost three years.
Ellison is the first black CEO of Lowe's, and he is among only a handful of African American CEOs of Fortune 500 companies nationwide, as detailed in a Wall Street Journal story Monday.
At J.C. Penney, Ellison implemented a turnaround strategy that included an improved balance sheet and increased store productivity, Lowe's said. He also has at least 12 years of home improvement experience. He previously served as executive vice president of U.S. stores at Home Depot, Lowe's chief rival.
Under Ellison, revenue has stabilized at J.C. Penney, but it hasn't turned profitable, losing $116 million in 2017. At Lowe's, he will be in charge of a company that had about five times as much revenue at $68 billion, producing a profit of $3.4 billion.
In a research note Tuesday, Oppenheimer analysts cited Ellison's success at Home Depot as a reason his appointment at CEO is "a huge step forward" for the company.
"In our view, (Lowe's) is in need of a fresh set to eyes to help to improve operational controls at the chain and potentially close a still significant profitability gap with HD," the note read. "Honestly, we think there exists no better leader for (Lowe's) at this juncture than Marvin Ellison."
Niblock has served as interim CEO since announcing his early retirement earlier this spring. He had been CEO for 13 years.
In its statement Monday, Lowe's also named Rick Dreiling, a Lowe's director since 2012, as its new board chairman, effective July 2. Dreiling served as CEO of discount chain Dollar General from January 2008 to June 2015, a period that included an unsuccessful bid to buy Matthews-based rival Family Dollar Stores.
Dreiling's appointment splits the chairman and CEO roles that had previously had been held by Niblock.
In recent years, Lowe's has been working to cut costs and boost profits at a time when home improvement retailers otherwise were benefiting from a strengthening housing market. Last fall, longtime investor hedge fund D.E. Shaw began building up an activist stake in Lowe's. The firm has been pushing for changes at the retailer, and in January Lowe's announced three new board members.
In late morning trading, Lowe's shares were down less than 1 percent to $86.71, while J.C. Penney shares had fallen 6 percent to $2.35. Lowe's announces its first-quarter earnings Wednesday morning.
"Attracting Marvin is a great win for the entire Lowe’s team," said Marshall Larsen, the lead director of the Lowe's board. "Marvin joins Lowe’s at a critical inflection point as we work to enhance our competitive position and capitalize on solid project demand in an evolving consumer environment."
In the past, Lowe's has grappled with its lack of diversity in its executive ranks.
Last year, a former Lowe's executive who is African American filed a racial discrimination lawsuit in which he alleged he was wrongfully terminated. Among other issues, the complaint alleged the employee, Michael Jones, was pitted against another executive as part of a succession plan to eventually take over for CEO Niblock. The company at the time called the allegations “unfounded and irresponsible.”