Activist Investor Ackman Resigns from J.C. Penney Board
Aug 13th 2013 6:59AM
Updated Aug 13th 2013 7:29AM
PLANO, Texas -- William Ackman has resigned from J.C. Penney's board as part of a deal to resolve an unusually public battle between the activist investor and the struggling department store operator.
J.C. Penney (JCP) shares rose in premarket trading Tuesday.
The announcement follows statements Ackman made last week saying he'd lost confidence in Penney's board and that its Chairman Thomas Engibous should be replaced. Ackman and the retailer's board also were bickering over how quickly the company should replace CEO Mike Ullman.
Ackman's investment firm, Pershing Square Capital Management, has a nearly 18 percent stake in Penney.
Penney named Ronald Tysoe as a director to fill Ackman's seat. Tysoe is former vice chairman of Federated Department Stores, which is now Macy's (M). Penney will name an additional new director in the near future.
Ackman said in a statement that the moves were "the most constructive way forward" for the Plano, Texas company and all other parties involved.
Penney's board also made it clear that it continues to support Ullman, who was brought back as CEO in April. Ullman had previously served as Penney CEO from 2004 to 2011.
The dispute has been a distraction for a retailer trying to dig its way out of trouble.
Ullman had replaced Ron Johnson, who was ousted as CEO after 17 months because his radical makeover led to massive losses and sales declines.
Ullman has been working to stabilize the business by bringing back basic merchandise and more frequent sales eliminated by Johnson in a bid to attract younger, hipper customers. But many analysts believe that while traffic is improving, there has been no evidence of a turnaround yet as the company heads into the home stretch of the critical back-to-school shopping period.
There are also increasing concerns about Penney's financial liquidity. Earlier this month the retailer said expects to finish the second quarter with about $1.5 billion in cash on its balance sheet.
Penney is expected to report its second-quarter financial results on Aug. 20. Its stock gained 8 cents to $13.25 before the market open.