JC Penney Pushed By Top Investor To Find New CEO
By Sam Lewis
Bill Ackman urges retailer to name new leader in 30 to 45 days
JC Penney (JCP) has begun its search to replace CEO Myron “Mike” Ullman, and the retailer’s biggest investor, Bill Ackman, penned a letter, which went public, to have one named within the next 30 to 45 days. “Considering the scale of JC Penney, the seriousness of the issues it faces, and the complexity of its business, there are only a handful of executives with sufficient talent and experience to take on the CEO role,” Ackman wrote in his letter. “We need a CEO with extensive, ideally department-store retail experience, strong operational skills, and a strong public company track record.” Frustrated by the slow pace of the CEO search, Ackman also told JCP board members that Allen Questrom — a former JCP CEO and a highly regarded leader in retail — agreed to return to JCP, as long as the CEO chosen was one Questrom could support.
Thomas Engibous, JCP’s current chairman, noted that Ullman had the support of the JCP board and was the right man for the job as they believe he would rebuild JCP by stabilizing operations, restoring vendor confidence, and attracting customers to return to the store. Engibous also stated, “When Ullman returned, it was understood that there would be an effort to rebuild the management team, including a process to identify his successor.” The process to find a new JCP CEO began three weeks ago, with Ullman playing an active part in it.
This marks the second time Ackman has pushed for Ullman’s departure since 2011. Ullman was CEO from 2004 to 2011, and was brought back in April to fix severely declining sales blamed on Ron Johnson, the CEO Ackman chose in 2011. On Johnson’s watch, sales dropped 25 percent in 2012 as he adopted a no-discounts strategy which led to JCP financing $2.25 billion from Goldman Sachs, Inc. to ease financial health concerns. Ullman’s return to the helm was viewed as a smart, but temporary, way to repair Johnson’s damage to vendor relations and company morale.
Needless to say, Ackman and Engibous are not on the same page, with the latter saying the board “strongly disagrees” and believes making the letter public was “disruptive and counterproductive.” Engibous continues, “The company has made significant progress since Ullman returned as CEO four months ago, under unusually difficult circumstances. Since then, Mike has led significant actions to correct the errors of previous management and to return the company to sustainable, profitable growth.”
JCP has traveled a tumultuous road over the last couple years. Having been through several leader changes — each with their own ideals for the company — some stability is needed. JCP has seen its back-to-school traffic rise and is preparing for the holiday season, where it hopes to rebound from recent struggles. While having a permanent CEO should be a priority, too much change at the top might not be a good thing.