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The recent sagas of troubled retailer JCPenney include tail-diving share prices, widespread executive turn-over, and more than 40,000 jobs lost store-to-store. Former CEO Ron Johnson bore the brunt of the blame when sales figures slipped and then crashed due to a "no coupon" sale policy that ultimately alienated JCP's core customers. But over the last week (and right in time for the company's earnings report to be released tomorrow) fingers are pointing to hedge fund manager, the retailer's largest shareholder, and former board member Bill Ackman.
According to Buzzfeed Business, Ackman took a seat on the board at the declining company in 2010 with the plan to turn it around and benefit from the inclining stock price. He was instrumental in hiring Johnson, and enjoyed "outsized role" as an adviser to the CEO. One analyst is quoted saying, "Ackman told us more than once that he consulted with Johnson on a daily basis. He was active in moving Johnson along this destructive force that brought Penney to the verge of bankruptcy in one year."
Ackman was instrumental in recruiting Johnson and advocated heavily for the "no coupon" policy as well as for continuing the policy when it fell flat on customer's wallets. He was also a proponent of the store-in-store revamp that brought in outside brands like Joe Fresh. He defended those choices in an interview on Charlie Rose last week, saying that they were "fundamentally correct" and that Johnson's only mistake was that he "moved too fast, too quick and in the public eye."
What followed was Johnson's ousting from the company and the reinstatement of Mike Ullman. Apparently unhappy with his lack of influence on Ullman's decision, Ackman lobbied for another new CEO, and failed to garner the support of the rest of the board. In a confusing move, the hedge fund manager released private company documents that exposed his desire for Ullman to head out a few days before Ackman agreed to leave the company last week.
At the moment, at least two things are up in the air. The first, Ackman's legal liability for releasing private company correspondences to the public. Per the Times: "During his talks with the Penney board on Monday night, Mr. Ackman demanded a release from all legal liability, according to the person briefed on the matter. The board refused, countering with a pledge not to sue him for breaching his director duties."
Also, Ackman still owns the largest share in JCP—nearly 18%—and is not legally allowed to sell for a certain amount of time due to insider-trading laws.
Meanwhile, JC Penney has returned to its tried-and-true sales methods and store coupons are back, but we'll see tomorrow when the earnings report is published whether the plan has worked—and by "worked" we mean kept the company from falling to irretrievable depths.
· JCPenney CEO Apologizes for Taking Away Your Precious Coupons [Racked]
· How An Overconfident Billionaire Brought A 111-Year Old Retailer To Its Knees [Buzzfeed Business]