CNBC's Jim Cramer said that sometimes even good management can't change a company's trajectory if it's headed for disaster.
He admitted that he had too much confidence in new management when he bought Foot Locker for the CNBC Investing Club's Charitable Trust. He said he was convinced that new CEO Mary Dillon would be able to turn things around for the struggling footwear retailer as she had previously done for Ulta Beauty.
"I knew turning around Foot Locker would be a herculean task, but I had so much confidence in Dillon's leadership that I figured everything would be fine no matter how hard the story got," he said. "While I put a lot of emphasis on the need for great management and how terrific CEOs can accomplish incredible things here, some things are impossible for even the best executives in the world."
In retrospect, orchestrating a comeback for a mall-based store with a lot of excess inventory like Foot Locker is just too difficult, Cramer said. As the company burned through cash and reported weak earnings with heavily shrinking sales, he soon realized that any potential comeback would take longer than he was prepared to wait.
"Management matters, sure, but when you bring in a new pilot on a crashing airplane, they can't defy gravity," Cramer said. "Pure hubris on my part. Hubris is an awful trait when it comes to investing, and I allowed it to cloud my judgment like a rookie would. Shame on me."
Sign up now for the CNBC Investing Club to follow Jim Cramer's every move in the market.
Questions for Cramer?
Call Cramer: 1-800-743-CNBC
Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram
Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com