JC Penney will reverse Ron Johnson's strategy of reducing discounts and put coupon advertising in newspapers again, said William Ackman, the activist investor who recruited the ousted chief executive.
Mr. Johnson, who was replaced by Myron Ullman on Monday, implemented a pricing strategy that eliminated almost all of the company's discounts and promotions in favor of everyday low prices. Shoppers shunned the department store chain, and sales sank 25% last year.
Mr. Ackman, speaking at a real estate conference in New York, also said Mr. Johnson's physical absence from the company's headquarters in Plano, Tex., undermined his overhaul of the department-store chain. Mr. Johnson, along with other former Apple executives he hired, commuted to JC Penney from California and New York. Mr. Johnson's plan, which Mr. Ackman today continued to call the "right vision" for the company, led to a net loss of $985 million last year.
Management also needs to "calm the vendors," said Mr. Ackman, whose Pershing Square Capital Management is JC Penney's largest investor. The company has delayed payments to suppliers, UBS AG analyst Michael Binetti said in a research note earlier this week.
Earlier this week, Mr. Ullman, who also preceded Mr. Johnson, said he would work quickly to build upon and leverage JC Penney's legacy as a retail leader, in the wake of Mr. Johnson's departure. "To that end, my plan is to immediately engage with the company's customers, team members, vendors and shareholders, to understand their needs, views and insights," he said in a statement. "With that knowledge, I will work with the leadership team and the board to develop and clearly articulate a game plan to establish a foundation for future success."
~ Bloomberg News ~