Hedge fund manager Bill Ackman appears increasingly isolated in his bid for the retailer JC Penney (JCP). The company is 110 years old, has just completed the first year of a transformation led by former Apple (AAPL) retail, Ron Johnson, and the results were disastrous: Sales slipped 25 percent to $ 13 evaporated billion and $ 4.3 billion in revenue, resulting in a net loss of $ 985 million, the worst in more than two decades. The shares lost more than half their value in the last year, and the money is decreasing, not the expected result that no child prodigy who helped Steve Jobs create more profitable stores in the world and, before that, developed Target ( TGT) cheap-chic style.
Ackman, whose Pershing Square Capital Management is the largest shareholder of the company, with approximately 18 percent of the shares, even trumpets Johnson as a genius who ultimately turn JC Penney in what he calls “favorite store United States.” So far, Pershing Square has lost $ 606.5 million of its investment.
Other investors are bailing. In early March, Vornado Realty Trust (VNO), whose president is aboard Steven Roth JC Penney, sold almost half its stake in the company after losing more than $ 200 million in investment last year. Vornado was the second largest shareholder of JC Penney. Hedge funds including Eminence Capital and Maverick Capital arranged substantial holdings in the company during the fourth quarter.
The stock lost another supporter of the March 6, when Citigroup (C) analyst Deborah Weinswig changed its recommendation to neutral from buy, saying that after a meeting with executives including Johnson, who is more concerned about the time it takes to return to sales growth. JC Penney is now the second most heavily-action short in the Standard & Poor’s 500 index, after GameStop (GME). (Short sellers are betting that the price will drop.)
Even investors who are hanging to have doubts. “The way I’ve been describing to my investors is:” I am well committed to owning it long term, or should be committed, ‘”says Steven Kiel, founder Arquitos Capital Management, which has JC Penney shares. “Those who are interested in the short term are the actions or shorted Johnson wants out, but looking at things from a long-term perspective is looking to see what this change might bring, what could be multiples of the current prices. “On March 5, the day the Dow Jones industrial average closed at a record high, JC Penney shares fell to $ 14.96, a minimum of four years. Analysts’ price targets on the stock for the following range 12 to 18 months of $ 10 to $ 25 Maxim Group at Argus Research.
Ackman, board member JC Penney, Johnson helped recruit in 2011, saying at the time that it was a “credit” to the company that could get such an executive to turn around its operations. In January last year, Johnson presented a four-year plan to modernize the store, saying the company would change its “brand, corporate identity, and create an entirely new personality.”
Instead, customers were disappointed by his plan to eliminate coupons and promotions in favor of a “fair fight” everyday low pricing strategy. Since then, Johnson promotions added back into the mixture. His supporters are betting that the centerpiece of his strategy will be more successful other: convert most company stores in collections of 100 stores-in-store. Last year, Johnson pitched eight stores, which he recorded higher sales per square foot than in other parts of the store. He says that 30 percent of the stores will be complete at the end of May. Johnson and the company declined to comment.
This month, JC Penney submits a boutique with Canadian retailer Joe Fresh Johnson says it will attract new buyers. “If Joe Fresh does not work, this could be the worst of the Ides of March because Brutus Caesar greeted on the floor of the Senate,” said Rick Snyder, an analyst with Maxim, which has an index of sale of the shares. Joe Fresh “is a microcosm of what we are trying to do, and if it does not work, I think is going to get very ugly.”
The bottom line: After JC Penney reported a loss of $ 985 million for 2012; the stock fell below $ 15 and a minimum of four years.
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