JC Penney's board made the "right choice" in bringing back Mike Ullman as CEO to try to save the company, CNBC's Jim Cramer said Tuesday, a day after the ouster of Ron Johnson.
The situation at JC Penney "was obviously more dire than what we realized. Mike Ullman might be able to stabilize the ship, but I worry," Cramer said on "Squawk on the Street."
"This is a company that is going to be hard-pressed to get that credit it needs to be able to do well. I think Ullman is the right choice because I think that he might be able to get that credit. A new guy unfamiliar with the landscape would be tougher."
Cramer pointed out that when Ullman was running the business between 2004 and 2011, the company under-performed several competitors, including Kohls and Target, although there were some bright spots. "I'm a little defensive on Ullman because I hated the way he was treated by (Bill Ackman)," he said.
In 2011, when Ullman was ousted as CEO and replaced by Johnson, Ackman, one of JC Penney's largest shareholders, led the charge.
(Read More: Back to the Future: Mike Ullman Rejoins JCP as CEO)
"Ullman is a hands-on guy. He's not going to commute to Plano (JC Penney headquarters in Texas) like Johnson. A hands-on guy might stop the turmoil," Cramer said. "Ullman is known in the industry as a stable guy."
"JC Penney had a decent strategy (before Johnson). It had a lot of customers and a lot of sales and he systematically carpet-bombed his own stores. He had a strategy that was untested. He blew it out throughout the organization. I do think that everyone who was connected with him has to go," Cramer said.
"I don't think that Ullman can do it alone, it's just such a big job," adding that JC Penney's executive suite needs to be revamped in favor of outsiders with fresh perspectives.
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"There are people who are rooting for Ullman. There are people who really didn't like Johnson's attitude from the day he left Apple," Cramer said.
As Cramer spoke, news about another company involving Ackman broke. Trading in Herbalife was halted after KPMG resigned as the auditor for nutritional-supplement seller.(Read More: KPMG Resigns as Herbalife Auditor; HLF Shares Halted)
Cramer said he expected Ackman to carry out another assault on Herbalife.
"You are going to see a biochemical assault on Herbalife in the next 48 hours. (Ackman) has to do this. This is what you do. This is the time that Ackman has to take the heat off of JC Penney," Cramer said. "The soul of what will happen today is JC Penney and Herbalife."
(Related: JC Penney & Macy's Back in Court)