COMMENTARY
7:36 am
Wed June 5, 2013

Blame The J.C. Penney's Board

J.C. Penney canned CEO Ron Johnson after seventeen months. His implosive changes cost Penney billions and shareholders forty percent of their investments.  

But Johnson’s only the face of the disaster. And nobody has mentioned Penney’s board of directors.

The real culprit is a guy named William Ackman and the rest of Penney’s board of directors. Ackman manages a hedge-fund that is Penney’s largest shareholder. It was Ackman who led the board to coax Johnson away from Apple.

The board allowed Johnson overnight to change the brand to JCP, change the pricing strategy, change the merchandise, change the advertising, and change the logo. Ackman ran interference for Johnson all the way.

What in the world does a hedge-fund manager know about re-positioning a retail brand? The board allowed all Johnson’s changes system-wide, without even one market test. Johnson’s a smart guy, but after his retail success at Apple, he must have thought he was bullet-proof.

He had some very good ideas, but his execution was horrid. Johnson clearly didn’t understand the Penney’s customer. And his methods and timing foretold disaster. 

Why didn’t the board realize that? Because only one of them has retail stores background. Johnson will land on his feet, but the jury’s out on Penney’s future.

If I were a stockholder, I’d be gunning for the entire board.

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