J.C. Penney Investors Re-Elect Board That Oversaw Johnson Era
Ron Johnson’s job at J.C. Penney Co. ended after his attempt to overhaul the retailer wiped out a quarter of its sales and about half of its market value. The board members who hired him are staying.
Investors voted to re-elect all 11 of J.C. Penney’s directors, the Plano, Texas-based company said today at its annual shareholder meeting. Myron Ullman, who replaced Johnson on the board and as chief executive officer on April 8, also was part of the slate that won shareholder approval.
The vote leaves in place directors including William Ackman, whose Pershing Square Capital Management LP is the company’s largest investor, Steven Roth, chairman of Vornado Realty Trust (VNO), as well as Chairman Thomas Engibous. Pershing Square and Vornado both disclosed large stakes in J.C. Penney on Oct. 8, 2010, with plans to turn the company around.
The board, which then included Ackman and Roth, made a splash in 2011 when it hired Johnson away from heading Apple Inc.’s successful retail unit. J.C. Penney racked up more than $230 million in management-transition costs putting Johnson and his team in place. Now, Johnson and almost all of those executives are gone.
Johnson tried to revamp J.C. Penney by overhauling almost everything, including its logo, pricing, merchandise and store layouts, in an effort to lure younger and affluent shoppers. The changes alienated too many of its older customers while not attracting enough new ones to make up the difference.
Sales plummeted almost immediately. The revenue declines coupled with spending on renovating about 700 of its 1,100 stores led to a net loss of $985 million last year.
Less than six weeks after reporting a fourth quarter in which sales sank 28 percent, the company was searching for Johnson’s replacement. Engibous called Ullman on Sunday, April 7, to discuss coming back to J.C. Penney, where he had been CEO from 2004 to November 2011. On April 8, the company announced his return and Johnson’s departure after about 17 months on the job.
The retailer yesterday said its first-quarter net loss widened to $348 million, or $1.58 a share, in the quarter ended May 4 from $163 million, or 75 cents, a year earlier. Excluding restructuring and management transition costs, the loss was $1.31 a share.
J.C. Penney fell 3.2 percent to $18.19 at 11:42 a.m. in New York. The shares sank 50 percent from when Johnson started on Nov. 1, 2011 through April 8. The stock gained 18 percent from the CEO change through yesterday.
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