Is J.C. Penney CEO Ron Johnson Losing His Biggest Backer?

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Ron Johnson
Bloomberg
Embattled J.C. Penney CEO Ron Johnson is already dealing with a 97% pay cut. Now, he may be losing the support of Bill Ackman, the hedge fund manager who hand-picked him for the top spot.

Reuters reports that Ackman, who has been Johnson's biggest and most prominent supporter, is starting to show signs of impatience with the beleaguered exec. In an investment conference sponsored by Thomson Reuters, Ackman acknowledged that Johnson had made some serious mistakes in his attempts to turn around the retailer's fortunes.

The turnaround, said Ackman, has been "something very close to a disaster." That's the strongest language we've heard yet from Ackman, but we're guessing many shareholders might take issue with the "something very close" part of that statement. Sales for the retailer dropped 25 percent in Johnson's first year at the helm, and the share price has lost more than half its value in the last year.

Ackman specifically cited the fact that there was "too much change too quickly without adequate testing." That's been a common complaint, especially with regard to the now-abandoned "fair and square pricing" scheme. Johnson infamously refused to do a trial run of the new pricing strategy, with the former Apple Store boss supposedly scoffing that "we didn't test at Apple." Another ill-fated change has been a complete revamp of the retailer's apparel offerings, which prompted many older customers to take their business to competitors like Sears (SHLD) and Kohl's (KSS). (At least one customer has stayed loyal, though -- even as Ackman criticized Johnson's turnaround strategy, Reuters reports that he wore socks purchased at J.C. Penney.)

J.C. Penney Co. (JCP) already lost one major investor when Vornado Realty Trust sold 10 million shares -- almost half its stake in the company. If Johnson loses the support of Ackman too, he won't be in the job much longer.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.


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dpruyn777

As a retiree of J C Penney's I am shocked by the fast down slide that it has encountered. But I guess that I shouldn't be to surprised. When I started to work at Penney's in 1970 I thought it was the only place to work. I just loved it. Then as the years went by so did the different departments that they offered. The appliance dept where I bought my tv and the furniture. We sold candy (yummy but gone) hunting dept for men, and a card dept (gone) But the time when I first noticed the biggest change was right before christmas time when I couldn't find anything decent to buy as gifts for my husband and family. SO upset to see it go down so low. Almost like trying to go home after being gone for a long time. Thank heavens they still have Carters for kids as that is about the only quality products that I found for me to get for the little ones I got a few other things but am hurt but still holding hope for it's future. It seems as if all thoughts for employees and customers went out the window after J.C. died. He had high standards for the company. There was simple little things he did for us like big Christmas parties and picnics in the summer to show his appreciation. He knew that the backbone was in his employees. I think that Ron Jonson could have stepped back and took a lesson from J.C. Now when we go shopping I can't find a seat to set down for a second to ease my back. So so sad. But at 74 I still have good memories.

April 08 2013 at 2:40 AM Report abuse +1 rate up rate down Reply
fjhooperbrown

I'm surprised how people in the know still have that man as CEO. I was a HUGE buyer at JCP. I was there every week and to tell the truth ...I have not been there since NOV. I still have gift cards from last year and I was lucky if I kept a gift card longer than a week. JCP clothing brand STINKS. The fabric is so thin tissue paper would cover you better. My husband was a Supervisor for 31 years, till the day he suddenly died. I met him there when I was the manager of the portrait studio ... I didn't shop anywhere than JC Penney's .... All my furniture was from there, our clothes, everything and now I just don't go there ... wake up and fire that man before you no longer have a store ......

April 08 2013 at 12:11 AM Report abuse +1 rate up rate down Reply
stuie55

im going back to kohl`s and sears. my favorite J C Pennys doesnt carry my styles anymore. It seems like they cater to a much youger crowd now. My cousin is a manager in one of the J C Pennys ever he doesnt know how the ship is staying upright. he lost half his stock value.
hey board of directors wake up .get a new C E O before its to late to turn it around.

April 07 2013 at 11:08 PM Report abuse +1 rate up rate down Reply
jwells1008

Very sad, hope Pennys survives, it will be without Ron Johnson if it does however.

April 07 2013 at 11:05 PM Report abuse +1 rate up rate down Reply
strid28

sad sad sad .. HOW many times I called them TO LET JCPENNY KNOW I would NO longer . be using them DUE to the HIGH intrest rates ON the JCPENNYS card the highest %28 ...each time I called jcpennys headquaters I was .. double talked TOLD all credit cards were high(not true ) and sent to a credit card company that was NOT jcpenny s and told the same crap .. .. so . I stopped useing jcpennys all together how dumb do they think we are ? 28% intrest nuts s... talk about shooting your self in the foot .. I loved jcpenny now . I could care lesss I dont use them

April 07 2013 at 10:33 PM Report abuse +1 rate up rate down Reply
missimin

Ron Johnnson said Penney's customers were "stupid" for not understanding his new policies. Who wants to shop at a store that thinks you're stupid? Boscov's is a much better store with everything customers want and need and they don't call their customers stupid.

April 07 2013 at 10:18 PM Report abuse +1 rate up rate down Reply
sue5966

You're right manddacc, it wasn't broke and didn't need fixed.

April 07 2013 at 9:43 PM Report abuse +1 rate up rate down Reply
manddacc

Here is some advice for Mr.Johnson.....DON"T FIX THINGS THAT AREN"T BROKEN!!!!!!!!!!!!!!!!!!

April 07 2013 at 9:37 PM Report abuse +1 rate up rate down Reply
Robert Cape

JCP is history. It has no stock, no sales, no future, and has laid off half of it's staff in stores. There is simply no reason to go there anymore unless you're 16 and a rich man's daughter..

April 07 2013 at 9:23 PM Report abuse +1 rate up rate down Reply
Connie

I find it very sad that Ron Johnson wants to attract the younger and wealthier customers, which means he is saying he doesn't give a darn about the people who helped JCPenney's to become the store it was. That never works! This gentleman should have been gone a long time ago, when everyone saw how poorly the store was doing. Instead, they let him sink the company to a lower position. He will make a name for himself, but I am not sure it's the one he wants.

April 07 2013 at 9:17 PM Report abuse +1 rate up rate down Reply