J.C. Penney’s turmoil at the top continued Tuesday as activist investor Bill Ackman stepped down from the board following a public disagreement over the struggling retailer’s choice of chief executive and chairman.
Ackman, whose Pershing Square Capital Management hedge fund is J.C. Penney’s largest shareholder, was replaced Monday by retail veteran Ronald W. Tysoe, the department store chain said Tuesday.
Tysoe spent nearly two decades between 1988 and 2006 in high-level positions at Macy’s Inc. back when it was Federated Department Stores Inc. J.C. Penney Chairman Thomas Engibous, in a statement, touted Tysoe’s “deep knowledge of the retail industry and financial expertise” as a key tool in the embattled company’s turnaround efforts.
J.C. Penney also said it planned to name another director “in the near future.”
In a statement, Ackman said the board shuffle “is the most constructive way forward for J.C. Penney and all other parties involved.”
The Plano, Texas, chain, which has suffered a string of double-digit revenue plunges and a precipitous stock plunge, also reaffirmed its “overwhelming support” for Engibous and Chief Executive Myron Ullman.
Ullman was chief executive of J.C. Penney before Ackman pushed Apple alum Ron Johnson into the position in 2011, only to be brought back on board in April in an attempt to erase Johnson’s blunders.
But last week, Ackman publicly urged the J.C. Penney board to speed up its search for a replacement for Ullman. Engibous and the board quickly sniped back with their own statement, calling Ackman’s actions “disruptive and counterproductive.”
On Friday, Ackman called for Engibous to be removed.
Soon, major investors began taking sides in the boardroom brawl. Billionaire George Soros, who snapped up 7.9% of J.C. Penney’s stock in April, reportedly backed the retailer.
On Tuesday, the retailer’s stock was up less than a percent, or 6 cents, to $13.23 a share in morning trading. So far this year, the stock has slumped more than 33%.
Analysts such as Charles Grom at Sterne Agee called J.C. Penney’s “quick and decisive announcement” about the board changes to be a “net positive.”
“Reading between the lines, the Board's strong support for Ullman implicitly suggests to us that JCP is on the road to recovery, which is an encouraging development,” Grom wrote in a note to clients.
Liz Dunn, an analyst with Macquarie Capital, wrote in a separate note that J.C. Penney will likely unveil more stabilizing strategies when it reports its quarterly earnings later this month.
“The board disagreements and challenges to leadership were a huge distraction that threatened the notion that JCP was confident in its plan and its leadership,” she wrote. “Thus we view today's announcement positively as it restores harmony on the board and a united board can re-focus on stabilizing the business.”
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