J.C. Penney, the struggling department store that fired ex-Apple retail head Ron Johnson as its chief executive officer in April, may be looking for yet another replacement for the position in as little as 30 days.
Hedge fund manager Bill Ackman, who’s on J.C. Penney’s board, has expressed frustration with the search for a permanent CEO and said he wants a new chief installed in 30 to 45 days, CNBC reported today, citing a letter from the investor. Mike Ullman, who was Johnson’s predecessor, returned to J.C. Penney as CEO in April on an interim basis to reverse a disastrous year, where sales slid 25%, or by $4.3 billion. It was unclear how long he would stay.
J.C. Penney issued a hostile response to the letter after the market closed today, saying Ullman has made “significant progress” since rejoining the company and slamming Ackman for the letter, which it saw at the same time it was leaked to the media.
“The Board of Directors strongly disagrees with Mr. Ackman and is extremely disappointed that his letter was released to the media at the same time that it was sent to the Board,” Chairman Thomas Engibous said today. “Mr. Ackman has been integrally involved in the board’s activities since he joined two years ago. This includes leading a campaign to appoint the Company’s previous CEO, under whose leadership performance deteriorated precipitously. His latest actions are disruptive and counterproductive at an important stage in the company’s recovery.”
Indeed, Ackman’s letter stems in part from his frustration with how poorly he has fared with his J.C. Penney investment. Pershing Square, Ackman’s fund, lost 2.2% in July based on investments in the department store company as well as a bet again supplement company Herbalife, according to Reuters.
Ironically, Ackman is the one who hand-picked Johnson for the role of CEO in the first place, impressed by the executive’s success in making Apple retail stores the most productive in the world. Johnson’s ideas didn’t work in J.C. Penney, however, where his plan to eliminate sales and coupons, reduce the supply of mainstay brands and turn the stores into a collection of shop-in-shops fell flat with core customers. The executive was fired in April after cries on Wall Street for his ouster reached a fever pitch.
Ackman has remained on the board of the company. The investor has made other headlines for his short position in supplement company Herbalife, which has led to a public feud with hedge fund rival Carl Icahn, and a recent investment in Air Products & Chemicals.
“Mike is the right person to rebuild J.C. Penney by stabilizing its operations, restoring confidence among our vendors, and getting customers back in our stores,” Engibous said in today’s statement. “He has the overwhelming support of the board of directors, and we are confident the company is in good hands.”
CNBC earlier reported that former CEO Allen Questrom agreed to return as the company’s chairman “under the right conditions,” and not under hostile circumstances. Questrom, who retired from the chain in 2004, was previously the CEO and chairman of Barneys New York and Neiman Marcus.
J.C. Penney shares jumped on the news, gaining 6.7%, or 86 cents, to $13.66 on Thursday. Still, it’s a far cry from about a year ago, when the shares closed at $23.40 on Aug. 10, 2012.
Update Aug. 8, 6:15 p.m., EDT: — This update includes a response from J.C. Penney.