JC Penney fires Ron Johnson: What now?

Ron Johnson, the Apple alum once touted as the answer to JC Penney's prayers, is out of a job after a mere 17 months running the struggling retail giant. And the old CEO, Myron E. Ullman III, is back in the driver's seat.

Johnson's ouster isn't exactly a complete surprise. Johnson controversially did away with JC Penney's longstanding strategy of offering steep — but temporary — discounts, instead opting for consistently lower prices without hyped-up deals. This approach has been under fire for months, especially after same-store sales dropped an incredible 31 percent in the latest quarter.

So Johnson aside, it is the rehiring of Ullman, who was in charge of the company for seven years, that really has people scratching their heads. What does this move mean for the flailing retail giant?

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Ullman will probably "serve as an interim CEO," Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisers, tells the AP, predicting that the company's board would eventually "hand the job to another executive who may want to take the company private."

And what's next for JC Penney? A leveraged buyout is unlikely, say Bloomberg Businessweek's Matt Townsend and Jeff Green, because the retail chain "has the industry's highest ratio of net debt to market value." Instead, they argue, hedge fund manager and JC Penney's biggest shareholder William A. Ackman's "best shot at salvaging the investment may be to push the department store to go private."

Wayne Hood, an analyst at BMO Capital Markets, suggests to the Dallas Morning News that "'a strategic voluntary Chapter 11 bankruptcy' would allow Penney to quickly right-size its business into a smaller, more profitable chain."

Then there is the option of turning JC Penney's top 300 stores into a real estate investment trust, or REIT, which would let the company use its most valuable resource — real estate — to entice brands to sublease space within Penney's stores. When that plan was floated last month, JC Penney's stock jumped 6.2 percent, its largest rise since February 21, according to Bloomberg.

As for in-store changes, expect a return to the sales and coupons that Johnson eliminated as soon as he arrived. Even Johnson eventually relented on this point at the end of his tenure, saying he was planning on bringing them back, according the AP. It is unknown whether Ullman will continue with Johnson's upscale pop-up shops that featured brands like Jonathan Adler and Michael Graves.

And why did Johnson fail? In the end, Daniel Gross of The Daily Beast argues, Johnson's early-career success may have come from "having the good fortune to run Apple's retail chain in a period when the company's designers and engineers were cranking out a series of world-beating, irresistible products" — not a "skill Johnson could easily transfer to a listing middle-market department store chain."