J.C. Penney Company, Inc. (NYSE:JCP) is apparently ratcheting up its search for the next chief executive officer, and shares of the company’s stock are jumping on the news. The stock rose as much as 8 percent after the revelation was made by CNBC.
J.C. Penney Company, Inc. (NYSE:JCP)’s Mike Ullman to be out again
Former CEO Myron Ullman took the helm of the struggling retailer in April again on an interim basis after the ouster of former CEO Ron Johnson. Now it looks like a permanent replacement will be in place sooner rather than later. Sources told CNBC that the department store chain is trying to placate one of its largest investors and also stabilize its falling stock price by pressing the accelerator on finding a permanent CEO.
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The network obtained a letter sent from activist investor Bill Ackman to J.C. Penney Company, Inc. (NYSE:JCP)’s board of directors. It expressed frustration that the company had not found a permanent replacement for Johnson fast enough and pushed for a new CEO to be in place in the next 30 to 45 days.
Questrom to return as J.C. Penney Company, Inc. (NYSE:JCP)’s chairman
Ackman’s letter indicated that former CEO Allen Questrom will return to act as chairman for the retail chain—but that’s based on certain conditions. Speaking on CNBC, Questrom said he wouldn’t return “under hostile circumstances.” He also indicated that finding a new CEO shouldn’t take more than 30 or 45 days because there probably aren’t any more than five people who would be qualified to take the position. He said he must approve of the CEO that’s chosen before he will return.
Questrom also said he was in favor of Ullman at the time of his rehiring in April.
Questions of cash burn at J.C. Penney
Morgan Stanley analyst Kimberly Greenberger predicted that J.C. Penney Company (NYSE:JCP) would have approximately $1.9 billion in cash at the end of the chain’s July quarter. However, last week it said it will have only $1.5 billion in cash at the end of July. According to Greenberger, this means that the chain used approximately $1 billion from its previous quarter and posted a lower operating cash flow while increasing capital spending and dealing with greater than expected inventory.
Greenberger isn’t the only analyst concerned about J.C. Penney Company (NYSE:JCP)’s cash burn. Citi analysts downgraded the company based on its cash burn and their belief that liquidity will be a real concern next year and a major problem in 2015.