J.C. Penney Co. (JCP) will reverse Ron Johnson’s strategy of reducing discounts and put coupon advertising in newspapers again, said William Ackman, the activist investor who recruited the ousted chief executive.
Johnson, who was replaced by Myron E. Ullman III on April 8, implemented a pricing strategy that eliminated almost all of the company’s discounts and promotions in favor of everyday low prices. Shoppers shunned the department store chain, and sales sank 25 percent last year.
Ackman, speaking today at a real estate conference in New York, also said Johnson’s physical absence from the company’s headquarters in Plano, Texas, undermined his overhaul of the department-store chain. Johnson, along with other former Apple Inc. executives he hired, commuted to J.C. Penney from California and New York. Johnson’s plan, which Ackman today continued to call the “right vision” for the company, led to a net loss of $985 million last year.
Management also needs to “calm the vendors,” said Ackman, whose Pershing Square Capital Management LP is J.C. Penney’s largest investor. The company has delayed payments to suppliers, UBS AG analyst Michael Binetti said in a note on April 9.
J.C. Penney rose 5.5 percent to $14.86 at the close in New York. At that price, the Plano, Texas-based company’s shares have declined 6.4 percent since the CEO change was announced.
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