What’s Up With J.C. Penney’s Board Fighting in Public?

Discussion
Aug 09, 2013

For those trying to keep up with the latest episode in the soap that is J.C. Penney, here we go:

2010

William "Bill" Ackman takes a 16.5 percent stake in J.C. Penney. The former CEO of the department store, Allen Questrom, tells The Wall Street Journal, "Out of the leading department stores, Penney comes in dead last. So from my vantage point, Ackman’s [involvement] is not bad. Clearly, J.C. Penney needs to improve its performance."

2011

Mr. Ackman is named to Penney’s board of directors along with Steven Roth, chairman of Vornado Realty Trust, which owns about 10 percent of the department store chain’s stock. CEO Myron "Mike" Ullman welcomes Messrs. Ackman and Roth to the board.

2011

Mr. Ackman, making no secret of his unhappiness with Mr. Ullman’s leadership of the chain, personally recruits Ron Johnson from Apple to lead J.C. Penney. It is announced that Mr. Ullman will stick around to oversee accounting, finance, logistics and other aspects of the CEO’s duties while Mr. Johnson does some on-the-job training.

2012

Ron Johnson takes over J.C. Penney and the business declines even further.

2013

Former CEO Allen Questrom publicly criticizes Ron Johnson’s leadership of the department store chain as sales continue to slide.

April 2013

Ron Johnson is out as CEO of J.C. Penney. Mr. Ullman is named interim CEO while the chain searches for someone to take over the position.

Yesterday

CNBC reports seeing a letter Mr. Ackman sent to the company board in which he claims that Mr. Questrom has agreed to rejoin J.C. Penney as chairman as long as he approves with the choice of a new CEO.

Later Yesterday

J.C. Penney’s board takes the unusual step of releasing a statement by board chairman Thomas Engibous that takes Mr. Ackman to task. In it, the board claims "significant progress" has been made in correcting issues made under "previous management" since Mr. Ullman’s return. It further states that the permanent CEO search is underway and that it will be "careful and deliberate to ensure we find the right long-term leader."

The best was left for last. Mr. Engibous writes, "Mr. Ackman has been integrally involved in the board’s activities since he joined two years ago. This includes leading a campaign to appoint the company’s previous CEO, under whose leadership performance deteriorated precipitously. His latest actions are disruptive and counterproductive at an important stage in the company’s recovery."

If you were in charge, what would you do with J.C. Penney? How would you straighten out its leadership issues? Is the public spat among board members likely to hurt the chain in finding a new CEO?

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17 Comments on "What’s Up With J.C. Penney’s Board Fighting in Public?"


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Dick Seesel
Guest
8 years 9 months ago
Bill Ackman is starting to look like the Eddie Lampert of JCP. Yesterday’s pronouncement makes Mike Ullman a lame duck despite his best efforts over the past four months to correct some of the Johnson-era promotional mistakes and to stop the cash bleeding. Why would anybody expect the lousy sales trend to turn on a dime, considering that Ullman inherited the bad inventory and shop concepts that Ron Johnson put in place? The home store in particular looks over-curated, overpriced and under-merchandised. Nobody is likely to accept a CEO position at JCP as long as Ackman is looking over one shoulder and Allen Questrom (a great retailer) over the other, because he or she will have no real authority. This is the Sears saga all over again, and it’s worth noting the other high-profile executives (including Howard Schulz of Starbucks) who have stood up for Ullman. If Ackman made good on his “threat” to dump his 18% ownership of JCP, the shares flooding the market would probably drive the stock price even lower over the… Read more »
Mark Price
Guest
Mark Price
8 years 9 months ago

A public spat within the board is highly unprofessional, and suggests to a potential CEO candidate that gaining the support of the board as a whole may be difficult if not impossible.

The key for Penney’s right now is to “harden the core”—get back to basics—provide customers with the products they want at a good price with decent merchandising and promotions. In addition, substantial effort must be given to reinvigorate the store associates who have suffered through all this mess. They are truly the key to getting the business back on its feet.

After the bleeding is stemmed, then the next steps are to improve the customer experience, get ecommerce closer to state of the art, and bring in new categories and products.

But it all starts with the basics. Stability is the first goal. I suggest the Chairman of the Board consider this before releasing any comments to the public again.

Paula Rosenblum
Guest
8 years 9 months ago
Oh my God. Who would take that job? Cathy Hotka said it best, and I’ll leave it for her to say it here as well. If I were in charge? There’s an old pilot joke that goes something like this: “In a single engine plane, what do you do when the engine fails? Bend over and kiss your bee-hind goodbye.” The department store is dying a slow and public death. It’s a dinosaur. Penney’s has just played out in an embarrassing and more public way than some of the others. I’ve read a lot about Mr. Ackman and his opinion. A lot of what he says actually makes sense, but his ego just gets in the way. He wasn’t wrong about JCP needing a make-over. But he’s way too loud. He gives “activist board member” a whole new meaning. So, if you’re looking for dinosaur riders, Mr. Questrom is a theoretically good choice. He did a good job the first time around and few people seem to remember that before that he was CEO at… Read more »
David Livingston
Guest
8 years 9 months ago

The first thing I would do would be to get out of retailing. JCP just isn’t good enough to compete in today’s market. Just the fact that JCP has failed as a company is more than enough to make it difficult to find a CEO. Probably best to hire a liquidation expert.

Camille P. Schuster, Ph.D.
Guest
8 years 9 months ago

Of course the public spat does not help. With this kind of dissension among the board members, a CEO is caught in the middle trying to please different bosses. No one wants that job.

Ryan Mathews
Guest
8 years 9 months ago

The old adage is true—when you don’t know where you are going, any road will get you there.

So, if I were King For A Day (the median tenure of a JCP leader), I would start with extensive research into what current and defected customers think of the brand; see if I could find a competitive niche I could occupy; formulate a plan to address that niche and … and this is the critical part … stick to the plan!

Along the way I’d remind the board and the leadership that they were the proverbial rats on the sinking ship and that pulling together is their only hope.

As to the final question, of course it will. That much sturm und drang would make most potential leaders think twice before taking a job at JCP.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
8 years 9 months ago

Politics are never good and even tougher when they are at the top. J.C. Penney needs a CEO who is willing to take some additional risks and try something new. Staying the course won’t work, and the board needs to realize this. In my opinion, I would rather fail fast than stay on a slow course to Chapter 11. By failing fast, you can continue to experiment and find a formula that works. Ron Johnson failed fast, but I give him credit for trying a new approach. J.C. Penney needs another Mr. Johnson to try something new.

Pointing fingers at the top when the company is in this situation is unproductive. It a risk/reward formula.

David Zahn
Guest
8 years 9 months ago

The public spat does cause any candidate to pause. It may not stop all from considering the job, but it has to be a factor.

I would get a LONG-TERM no-cut contract too, that gives me wide latitude to run the operation without interference from the board (hence, why I would be disqualified EVEN IF I were to be considered).

I would focus on what JCP has done well in the past—affordable fashion, strong exclusive “store brands” among them.

BLESSED HIGHLYFAVORED
Guest
BLESSED HIGHLYFAVORED
8 years 9 months ago

If I were in charge, I would cater to the full size and super skinny products because in today’s society, people are either or. Catering to skinny is missing huge sales with the thick and full bodied. Leaders should look around and base their decisions on the public instead of each other. Use a person that changes with the times and economy fluctuation to bring in more sales and new clientele.

Lee Kent
Guest
8 years 9 months ago

All egos aside..heehee, the only person likely to step into this would have to be another big ego and that has the potential of adding fuel to a wild fire!

I’ve said it before and I’ll say it again: Ron Johnson was on the right track, but the wrong execution. Have you visited a store lately or looked at their web site? All the makings of something good. He just didn’t get the customer on board.

So back to the question, What would I do? I’d leave Mikey in there a little longer to keep the money collectors and board at bay and I’d go looking for a great CMO. Try to salvage what I could from Ron Johnson’s effort and try to reach the ‘right’ customer base. I didn’t say the ‘old’ customer base. You heard me….

Lee Peterson
Guest
8 years 9 months ago

I’m sure I’m in the minority on this, but I would hire someone like Ron Johnson and then actually give him time to turn the beast around. One year is not enough time to ‘fix’ a relatively healthy brand, let alone a dinosaur on its last legs.

But way before that, I would privatize and downsize the entire venture so I wouldn’t have to worry about every nuance of my last statement or announce to the street (short term thinkers) every time I had a challenge to my thinking! Which, by the way, would undoubtedly be numerous due to said dinosaur being brought into the age of modern retail. A daunting task.

Mike B
Guest
Mike B
8 years 9 months ago

These issues will sink this company. These sorts of things should not be public. The shops look great for clothing in my local store and traffic there seems fine. I am upset about the cut in quality on some of the private label goods like the Stafford dress shirts. I have not purchased anything at JCP in nearly a year.

Craig Sundstrom
Guest
8 years 9 months ago

I only had to get twelve words into the comments to see my thoughts expressed…exactly. Suffice it to say that the fact that someone who only owns less than a fifth of a company is allowed to exercise control is disturbing; that it has proven to be a disastrous control makes it worse.

George Anderson
Guest
8 years 9 months ago
In a letter issued today, Mr. Ackman accused the Penney board of “flying blind.” Mr. Ackman took issue with Penney management hiring executives to fill the positions left vacant when those brought in by Ron Johnson left the company. He argued that those positions should be filled when a permanent CEO is named. Mr. Ackman took particular issue with the hiring of Kraft marketing exec Debra Berman. According to The Wall Street Journal, Mr. Ackman wrote, “The decision to hire a consumer packaged goods marketing executive as the CMO of J.C. Penney is a strange decision. The skills and experience one learns from marketing lunch meats and American cheese to consumers are not logically applicable to marketing JCPenney to our customer base.” Thomas Engibous, Penney’s chairman, issued the following statement in response: “The Board is focused on the important work of stabilizing and rejuvenating the business. It is following proper governance procedures, and members of the Board have been fully informed and are making decisions as a group. This includes the CEO search process, which… Read more »
William Passodelis
Guest
8 years 9 months ago

Mr. Questrom is a GREAT merchant and I really respect him. His reputation and history in the world of retail and higher-end retail fully precedes him. I also fully respect Mr. Ullman and as for some nay-sayers, his efforts have ALREADY started to regain a foothold for a faltering company.

This public spat, however, is unprofessional and very worrisome. Any self respecting potential candidate is going to fully recognize this chaos and would be likely unwilling to step into the storm. This is very damaging to their search and their company. The next leader will have to have the gumption to stand up to all the sides and may be shown the door for doing so, which would be further disaster. A “yes-man” would be less than worthless. This is too much like Mr. Lampert and his stranglehold of control at Sears. Very foreboding.

Janet Dorenkott
Guest
Janet Dorenkott
8 years 9 months ago

I’ve heard the fighting played out on CNBC over the years. People are quick to point the finger and Penney’s seems to want to point the finger quickly. Big changes require time. But execution of the plan should be fast. Penney’s isn’t my mom’s department store, it’s my GRANDMA’S department store.

First thing Penney’s has to do is change that image. Start by changing the name. Penney’s suggests old! People step over pennies in the street. Rename, rebrand, out with the old, in with the new. And don’t wait to do it. Do it now, with or without new leadership!

Ed Rosenbaum
Guest
8 years 9 months ago

There is little more I can add after so many of my colleagues have already said what is necessary. Who in their right mind would take this position with the current in fighting going on? I certainly wouldn’t want it on my resume that I was part of a sinking ship.

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