J.C. Penney Company, Inc. (NYSE:JCP) announced that majority shareholder Bill Ackman was resigning from the board, and some couldn’t be happier. Analysts at Gilford Securities blame Ackman for virtually everything that has happened since he brought in Ron Johnson to be the company’s new chief executive officer.
Ackman a “destructive force” at J.C. Penney
In a report issued to investors this week, analyst Bernard Sosnick urged Ackman to “go away; for your sake and ours.” He believes J.C. Penney Company, Inc. (NYSE:JCP) is stabilizing now that Johnson is gone and former CEO Myron Ullman is back in. He also thinks that without Ackman, the retail chain has an even greater chance at turning things around.
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According to Sosnick, the company “had fixable problems but veered to the verge of declaring bankruptcy”—all because of Ackman’s influence. He notes that Ackman would “boastfully inform” people that he spoke with Johnson every day, and he believes that he acted “as propagator of unsound ideas that impelled Johnson along his disastrous course.”
Ullman’s been in this boat before with J.C. Penney
He notes that Ullman was heading up J.C. Penney Company, Inc. (NYSE:JCP) in the early 1990s when it was actually in bankruptcy, so he knows what it will take to turn things around. As such, he thinks Ullman is the right choice for CEO, at least for now.
The analyst also notes that Ackman did want Allen Questrom to serve as J.C. Penney’s chairman, and he believes Questrom would be the right man for the job. However, he doubted that Questrom would accept the position with Ackman and his divisive personality on the company’s board. He also doubts whether Ackman would be able to choose a good CEO because of his history in choosing Johnson previously.
Ackman was “a backseat driver”
He also had plenty of heated words for Ackman in his report.
“The damage inflicted on Penney needs to be corrected by a knowledgeable retailer, not by a backseat driver whose license ought to have been revoked,” he wrote.
The analyst said from what they see and hear in J.C. Penney stores, it sounds like the corrective actions taken by Ullman so far are working and that stability is returning. He also notes that Mother’s Day sales were strong at the retailer. He credits Ullman with stemming the tide of bleeding sales and believes that even though Ullman might not be doing what Ackman wants, it might be better that way.
Now that Ackman is resigned, the only question that remains is whether he will sell his shares and walk away completely. This question will take some time to answer. Shares of the retailer’s stock fell as much as 3 percent on Tuesday.