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J.C. Penney CEO Ron Johnson Loses Supporters on Wall Street

A bad quarter sends investors fleeing, and the shares plummet
Ackman has lost $606.5m on J.C. Penney
Ackman has lost $606.5m on J.C. PenneyPhotograph by Jonathan Kirn/Bloomberg News

Hedge fund manager Bill Ackman is looking increasingly isolated in his bet on retailer J.C. Penney. The 110-year-old company just completed the first year of a transformation led by former Apple retail chief Ron Johnson, and the results were disastrous: Sales slid by 25 percent to $13 billion and $4.3 billion in revenue evaporated, resulting in a net loss of $985 million, the worst in more than two decades. The shares lost more than half their value in the past year, and cash is dwindling—not the outcome anyone expected from the wunderkind who helped Steve Jobs create the world’s most profitable stores and, before that, developed Target’s cheap-chic style.

Ackman, whose Pershing Square Capital Management is the company’s biggest stockholder, with about 18 percent of the shares, still trumpets Johnson as a genius who will ultimately turn J.C. Penney into what he calls “America’s favorite store.” So far, Pershing Square has lost $606.5 million on its investment, according to data compiled by Bloomberg.