ACKMAN: Here's The Problem With Ron Johnson's Vision For JCPenney Right Now
Jan 26, 2013, 01:45 IST
Advertisement
He's the largest investor in JCPenney and he has fully supported CEO Ron Johnson throughout an extremely turbulent year.
Ackman noted that Johnson has done some "incredible things" so far at JCPenney. The vision he came up with is a big one and it appears to be working thus far. "What Ron is doing here is something that is almost never been done before, certainly in the context of a public company," said Ackman. But there's one big problem with it right now. "The problem with the vision is it's a small percentage of the store, which is the so-called 'shop' strategy," said Ackman. "It's 10-11 percent of the square footage." Sales in the shops have been strong thus far. IZOD, for instance, recently said that its new shops in JCPenney stores are a "home run." That other giant chunk of the store, though, is killing JCPenney. "The negative is 90 percent of the store," said Ackman. "Very very difficult year. Sales results reported so far — mid 20s down comps. Those are numbers that no retailer likes to see."So, what would it take for Ackman to determine that Johnson actually wasn't the right person for the job?
Advertisement
"If three years from now, Ron Johnson is still struggling to turn around JCPenney, then he's probably the wrong guy," said Ackman. He elaborated when pressed by CNBC host Scott Wapner. Will an activist investor like Ackman actually wait three full years to see of Johnson's ideas will work? "The answer here is: JCPenney's going to make progress," said Ackman. "I expect it will and Ron expects it will as well. Again, no company survives down 25 percent comps over 3 years that's not happening. Ron is going to work to solve the problem." "And I wouldn't project the future based on the last 12 months. That would be the advice I would give." Here's the video — from CNBC:
Advertisement