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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