J.C. Penney Surges After Ackman Reiterates Belief in CEO
The shares advanced 4.8 percent to $20.66 at the close in New York. The Plano, Texas-based company has declined 41 percent this year.
Ackman believes in Johnson’s “start-up mentality,” he said yesterday at the Delivering Alpha conference in New York, produced by CNBC and Institutional Investor Inc. He said he may make 15 times his investment in the fourth-biggest U.S. department store company. Pershing Square, with an 18 percent stake, is the biggest shareholder.
The jump in the stock is partially because of the presentation yesterday and “mostly due to Ackman’s commitment,” said Steven Kiel, the founder of Annandale, Virginia-based Arquitos Capital Management LLC, which holds J.C. Penney shares.
Johnson, the former retailing chief of Apple Inc. (AAPL), has worked to transform J.C. Penney stores into collections of branded shops and instituted a three-tiered pricing system to wean customers off discounts. The strategy has met with resistance from shoppers who crave coupons or are unfamiliar with the new look, contributing to a 20 percent decline in first-quarter sales.
The CEO reiterated yesterday that his turnaround will take four years and that he is sticking with his strategy for “everyday low prices” in a presentation yesterday at the Fortune Brainstorm Tech conference in Aspen, Colorado.
J.C. Penney, with more than 1,000 locations and $17.3 billion in sales last year, is expected to report second-quarter earnings on Aug. 8.
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