May 22 (UPI) -- JCPenney CEO Marvin Ellison caused the department store's shares to plunge after resigning Tuesday to become president and CEO of Lowe's.
Ellison will take over the top job at Lowe's effective July 2. He'll succeed Robert A. Niblock, who previously announced his intention to retire, the hardware store chain said in a statement.
JCPenney said in its own statement Tuesday it created an Office of the CEO, which will allow four leaders to share equal responsibility for running the company until a new CEO is appointed.
"It has been a tremendous honor leading the Company as Chairman and CEO, and working alongside some of the most talented professionals in retail," Ellison said. "Their warrior spirit is unmatched, and I have the utmost confidence that JCPenney has the talent and expertise to achieve sustainable, long-term growth."
Lowe's said Tuesday attracting Ellison was a "great win for the entire Lowe's team," while Ellison added he was "thrilled" to serve as president of the home improvement store.
"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," Marshall O. Larsen, lead director of the Lowe's board, said. "We look forward to shepherding an exciting new chapter for Lowe's under Marvin's leadership."
The announcement of Ellison's departure from JCPenney brought shares down nearly 3 percent, while shares of Lowe's were up 1.69 percent in early-morning trading.
JCPenney has struggled to compete with online shopping sources as consumers shift away from shopping at malls -- where most JCPenney stores are located.
Last year, JCPenney closed 138 stores and laid off about 5,000 people because of slow sales.
Neil Saunders, managing director of GlobalData Retail, told CNBC that Ellison's turnaround program for JCPenney "partly delivered but is still far from complete."
"Indeed, exiting before his plan is complete is a tacit admission that he may not be able to deliver what investors are looking for," Saunders said.