In one of the stranger situations in retail right now, J.C. Penney is defending itself against charges by activist investor Bill Ackman that it’s not moving fast enough to hire a full time CEO and remedy a situation that Ackman created when the guy he picked nearly destroyed the company.
Late Thursday, J.C. Penney filed a form with the Securities and Exchange Commission, in which chairman Thomas Engibous said, “the company has made significant progress since Myron E. (Mike) Ullman, III 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."
Ironically, the “unusually difficult” circumstance were created by Ackman who several years earlier had acquired a large stake in J.C. Penney and then sought to have former Apple stores executive Ron Johnson named as CEO. What happened next has become retail legend as Johnson embarked on a grand plan that cost a lot of money, alienated customers and resulted in precipitous declines in same store sales. Johnson was ousted earlier this year and replaced by the man he replaced, Mike Ullman, who is the same person Ackman doesn’t think the company is moving fast enough to replace.
"Mike is the right person to rebuild J.C. Ppenney by stabilizing its operations, restoring confidence among our vendors, and getting customers back in our stores. He has the overwhelming support of the board of directors, and we are confident the company is in good hands."
That said, Engibous acknowledged that it was always the intent to find a successor and a search process was begun three weeks ago before characterizing Ackman’s action as disruptive and counterproductive to the company’s recovery.
At issue is a letter release earlier Thursday in which Ackman expressed his displeasure with the pace at which J.C. Penney was conducting the CEO search that was sent to the company and released to the media simultaneously.
“Mr. Ackman has been integrally involved in the board's activities since he joined two years ago,” Engibous said. “This includes leading a campaign to appoint the company's previous CEO, under whose leadership performance deteriorated precipitously.”