Wednesday, 1 April 2015
Last updated 18 min ago
Apr 9 2013 | 10:12am ET
Just days after his champion, Pershing Square Capital Management's William Ackman, called his stewardship of J.C. Penney "very close to a disaster," Ron Johnson is out as the retailer's CEO.
The company's board met yesterday and decided to let Johnson go.
Johnson, who took over Penney's just 17 months ago, was replaced by his predecessor, Myron Ullman—the very man Ackman successfully sought to replace at the end of 2011 with Johnson, whose hire was considered a coup at the time; Johnson was highly sought-after following a successful run as Apple's retail chief, overseeing the introduction of the company's hugely successful stores.
Penney's was a different matter, however. The end of Johnson's tenure comes after a series of missteps as the former Apple Inc. executive sought to remake the struggling retailer—notably a high-profile, and failed, effort to end discount sales, which succeeded only in driving away customers and further cutting into the company's sales.
"I wouldn't recommend that we go back to the way J.C. Penney was when I left" after a seven-year tenure, Ullman said. "Things change." But, "there's no reason to try and alienate customers who want to try and shop at J.C. Penney."
Penney's gave Johnson $50 million in shares to lure him.
Most analysts thought that Johnson had at least another quarter or two to turn things around, even after Ackman said Friday that criticism of Johnson "is deserved" and that "there have been some big mistakes."
"The impact has been, on a consolidated basis, very close to a disaster," both for Penney's and for Pershing Square: The hedge fund, Penney's largest shareholder, has lost about $500 million on paper on its stake.
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