By Tiernan Ray
Analysts today were reflecting on the war of words inside, and outside, of J.C. Penney (JCP), with activist investor Bill Ackman of Pershing Square Capital, and the company’s board, both releasing public statements in the last 24 hours attacking one another’s handling of the search for a new chief executive.
CNBC’s David Faber reported a short while ago that Perry Capital, a 7% holder, is going to file a 13-D later today asking the company to immediately move to replace Mike Ullman as interim CEO with former CEO Allen Questrom as chair and Ken Hicks, head of FootLocker (FL) as CEO.
Penney shares are down 75 cents, or 6%, at $12.91.
Credit Suisse’s Michael Exstein, reiterating an Underperform rating on the stock, and a $15 price target, writes this morning that the battle is “Just what JC Penney does not need,” as “The very public debate around Mr. Ullman’s tenure will only make it more difficult to attract senior level executives to JC Penney.”
“Personalities” have crept into the battle over the company, he writes, at a moment when it is at an especially “crucial stage” in its efforts to write itself. Interim CEO Mike Ullman hasn’t had the time to make necessary changes, writes Exstein:
Mr. Ullman stepped into not only a significant management void but also into what appears to be a company in strategy limbo with the added stress of internal political maturations. Having been reappointed into management last April, Ullman could not have done anything considerably different at this point to either prove or disprove his competency or impact the content of the store. Actions taken by Ullman to-date have been in two areas: changes in promotional strategies and new management appointments. Given JCP’s prior commitments and long merchandise lead times, significant changes to merchandising will not likely show up in the stores until at least October.
And Citigroup’s Deborah Weinswig reiterates a Sell rating and an $11 price target, writing that the company needs a “dream team,” and that Questrom and Hicks appear to be just that:
We observed that if Mr. Ullman and the Board were able to convince Ken Hicks, President and CEO of Foot Locker, to rejoin JCP in an executive role, we believe that our Sell call would be at risk. We do not think it is realistic to expect business to improve without a full team and turnaround plan in place [â¦] Mr. Questrom and Mr. Hicks have turnaround experience at several retailers and could be a âdream teamâ to right the ship at JCP. Mr. Questrom was previously Chairman and CEO of Neiman Marcus, Federated Department Stores (now Macy‘s (M)), and Barneys New York. From 2000 to Dec. 2004, he was Chairman and CEO of JCP. Mr. Hicks resigned from JCP in June 2009 to be President and CEO of Foot Locker.