Report: J.C. Penney to replace Ullman as CEO
Plano, Texas — According to multiple reports on Thursday, J.C. Penney will replace Myron “Mike” Ullman as CEO, and the search pace is being pressured by top investor Bill Ackman.
Penney, which has not commented on the reports, is being pushed to name a new CEO in 30 to 45 days, revealed in a letter Ackman sent to the retailer’s board of directors. Ackman also told board members that former Penney CEO Allen Questrom would return as chairman if the retailer chose a new CEO he liked.
"I am very concerned about the future of J.C. Penney," Ackman wrote in the letter. Only recently has Penney selected a search firm, although Ackman’s letter indicated he has been urging the search process to begin since April. Ackman is pushing for an experienced CEO to take the helm of the embattled chain. "We need a CEO with extensive, ideally department-store retail experience," Ackman said in his letter.
Ullman was brought back to Penney in April to try and resurrect the company after Ron Johnson’s much-publicized failure to turn the retailer around. Ullman’s return was deemed a temporary one, but some insiders have expressed surprise at how quickly Ackman wants him replaced. "A new CEO would be disruptive because that would bring more change," Walter Loeb, a veteran retail analyst, told Reuters. A Penney spokesperson told the Wall Street Journal that the CEO search is nothing more than “market rumor and speculation.”
Penney shares earlier this week hit their lowest levels since 2001. Some analysts expect Penney to report that same-store sales fell as much as double digits when it releases quarterly results on Aug. 20.
More drama at J.C. Penney
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.”
Gap gets it done, 2Q comps rise 5%
Gap Inc. continues to enjoy momentum at its namesake Gap stores and Old Navy units which pushed total company results up 8% to nearly $3.9 billion.
Results were strongest at Gap and Old Navy stores where comps increase 6% while Banana Republic comps declined 1%.
“We are pleased with our second quarter performance overall, and we’re focused on continuing our momentum as we move into the second half of the year,” said Glenn Murphy, chairman and CEO of Gap Inc.
The company will report full second quarter financial results on August 22 and said it expects earnings per share in the range of 62 cents to 64 cents compared to 49 cents last year.