True to form, Mr. Ackman, whose fund owns 16.5 percent of J.C. Penney, was announced yesterday as one of the department store's new nominees to its board. Joining Mr. Ackman among the nominees to the Penney board was Steven Roth, chairman of Vornado Realty Trust, which owns roughly 10 percent of the department store chain. Both are expected to win election to Penney's board in February.
Myron (Mike) Ullman, chairman and chief executive officer of J.C. Penney, said in a statement, "We welcome Bill and Steve to the board. They share our passion for operational excellence and are committed to enhancing value for all of the company's shareholders. We look forward to benefitting from their expertise."
Since their combined share in Penney was made public, speculation has been that Messrs. Ackman and Roth would make some sort of real estate play, perhaps spinning of the chain's holdings as a separate real estate investment trust (REIT). Mr. Ackman tried unsuccessfully to get Target to pursue this strategy in 2008 and 2009.
Leah Hartman, senior vice president at CRT Capital Group, told The Dallas Morning News that she expects the new board members to help Penney to "find ways to unlock additional value" from its real estate.
Mr. Ullman doesn't think he and the new board members will be overly transfixed on the company's real estate. As a Wall Street Journal report points out, the chain created a REIT back in 1999 for tax purposes. Today, the REIT owns about 38 perdent of the company's real estate assets.
Penney's CEO told the Journal, that he did not anticipate spending a lot of time with the new members discussing real estate.
The company also announced yesterday that it was closing several stores as well as "winding down" its catalog business.
"The actions we are announcing today are significant steps in an ongoing process to ensure we are best managing costs and allocating our resources effectively to the strategies that will allow us to improve margins and drive profitable sales over the long term," said Mr. Ullman in a statement. "We see significant opportunities ahead in our core department store and online businesses as part of our Long Range Plan and we are well prepared to capitalize on them in 2011 and the years to come."
- JCPenney Agrees to Name William Ackman and Steven Roth to Board of Directors - J. C. Penney Company, Inc.
- JCPenney Takes Strategic Actions to Maximize Long-Term Growth and Profitability - J. C. Penney Company, Inc.
- Plano-based J.C. Penney closes stores and invites activist shareholders onto board - The Dallas Morning News
- Penney to Give Activists a Say on Board - The Wall Street Journal