J.C. Penney Co. (JCP:US) rose after Bill Ackman, the founder of Pershing Square Capital Management LP, reiterated his confidence in Chief Executive Officer Ron Johnson’s turnaround efforts.
The shares advanced 4.8 percent to $20.66 at the close in New York. The Plano, Texas-based company has declined 41 percent this year.
Ackman believes in Johnson’s “start-up mentality,” he said yesterday at the Delivering Alpha conference in New York, produced by CNBC and Institutional Investor Inc. He said he may make 15 times his investment in the fourth-biggest U.S. department store company. Pershing Square, with an 18 percent stake, is the biggest (JCP:US) shareholder.
The jump in the stock is partially because of the presentation yesterday and “mostly due to Ackman’s commitment,” said Steven Kiel, the founder of Annandale, Virginia-based Arquitos Capital Management LLC, which holds J.C. Penney shares.
Johnson, the former retailing chief of Apple Inc. (AAPL:US), has worked to transform J.C. Penney stores into collections of branded shops and instituted a three-tiered pricing system to wean customers off discounts. The strategy has met with resistance from shoppers who crave coupons or are unfamiliar with the new look, contributing to a 20 percent decline in first-quarter sales (JCP:US).
The CEO reiterated yesterday that his turnaround will take four years and that he is sticking with his strategy for “everyday low prices” in a presentation yesterday at the Fortune Brainstorm Tech conference in Aspen, Colorado.
J.C. Penney, with more than 1,000 locations and $17.3 billion in sales last year, is expected to report second-quarter earnings on Aug. 8.
To contact the reporters on this story: Sapna Maheshwari in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Robin Ajello at email@example.com