Shares of J.C. Penney (JCP) are sliding, while Lowe's (LOW) shares are on the rise, after the department store owner announced that Chairman and CEO Marvin Ellison will resign from his role to head up the home improvement retailer, effective July 2. Commenting on the news, Baird analyst Peter Benedict told investors he sees the move as a "best-case scenario" for Lowe's shareholders.

MARVIN ELLISON SWITCHES SHIPS: J.C. Penney has announced that Chairman and CEO Marvin Ellison has notified the company of his decision to resign from his role to pursue another opportunity with Lowe's. While Ellison will remain a director and CEO through June 1, he will step down from his position as chairman of the board effective immediately. The board of directors has elected current Lead Independent Director Ronald Tysoe as Chairman of the Board and has created an Office of the CEO, which will be comprised of Chief Financial Officer Jeff Davis, Chief Customer Officer Joe McFarland, Chief Information Officer and Chief Digital Officer Therace Risch and Executive Vice President of Supply Chain Mike Robbins. These four leaders will share equal responsibility for the company's day-to-day operations until a new CEO is appointed. A search committee has been formed to conduct a search for a chief executive officer at J.C. Penney. Meanwhile, Lowe's has also announced that Ellison has been named president and CEO, effective July 2. He will also join Lowe's board of directors at that time. Ellison succeeds Robert Niblock, who previously announced his intention to retire.

'BIG WIN' FOR LOWE'S SHAREHOLDERS: In a research note to investors following the news, Baird's Benedict said that the naming of Marvin Ellison, the former Home Depot (HD) executive vice-president of U.S. Stores, as Lowe's new CEO represents a "best-case scenario" and "big win" for Lowe's shareholders. The analyst expects the company to benefit greatly from Ellison's "extensive" experience and understanding of the business and believes Ellison is "uniquely qualified" to be the next leader of Lowe's. A "fresh thinking" narrative at Lowe's is in full swing, he contended, while reiterating an Outperform rating and $110 price target on Lowe's shares.

PRICE ACTION: In morning trading, shares of J.C. Penney are off their earlier lows but remain down about 2% at $2.44, while Lowe's has gained fractionally to trade near $87.68 per share.
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