This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Ackman: JCPenney Sales Have Hit 'Bottom'

By Christina Cheddar Berk, News Editor

NEW YORK ( CNBC) -- Hedge fund manager Bill Ackman remains steadfast in his belief that his investment in JCPenney (JCP) will pay off, and says he has the patience to wait out the company's turnaround under new CEO Ron Johnson.

In an interview Tuesday with CNBC's "Squawk Box," Ackman said JCPenney has the right management and the right strategy in place.

Pershing Square, the firm Ackman founded, has placed a big bet on JCPenney and is the department store retailer's largest shareholder. As of March 31, Ackman owned about 39 million shares, or about 17.9% of the company.

That means Ackman took a big hit earlier this month when JCPenney shares plunged in the wake of a disappointing earnings report that signaled to some investors that the struggling retailer's new strategy may take some time to boost sales.

More from CNBC
Curt Schilling's Videogame Company Goes Bust
Career Skills: Do's and Don'ts of Ice Breakers
Auto Jobs: Sign of the Times

According to Ackman, part of the issue is JCPenney has had to change the image of its brand and the experience in its stores before it can attract the best vendors and products. Ackman expects Johnson has accomplished this, but says customers have yet to see the new products that he has ordered, and won't until the beginning of August, when they will be announced.

"It's a difficult transition," he said. "There are some extreme couponing customers, who we probably lost money on, who may not come back, but the people who are focused on quality and value, and ultimately product, we should do very well."

This leads Ackman to suspect that the sharp same-store sales decline of 18.9% in the first quarter should be the bottom for JCPenney.

Ackman said he has "a lot of patience" to wait for the company's strategy to yield results.

"Time is your friend because eventually people will get it," he said.

During the first quarter, JCPenney focused on brand marketing but not on price and value, he said. He expects that message will come.

The department store also hasn't announced the names of the new brands that will be sold within the store. That announcement won't come until August, Ackman said. There also will be new technology coming to change the customer experience, he said.

Despite Ackman's confidence, he has stumbled with an investment in the retail sector in the past. In 2009, Ackman had started a fund to bet solely on Target (TGT). He took a stake, and launched a proxy fight, where he looked to replace four members of Target's board. In the end, the effort didn't work, and Ackman lost much of the value of that investment and even reached into his own pocket to pay back a portion of the money investors had given him.

--Written by Christina Cheddar Berk at CNBC
CNBC is a world leader in business news, providing real-time financial market coverage and business information.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.64%
FB $117.43 -0.96%
GOOG $692.36 -0.84%
TSLA $232.32 -3.92%
YHOO $36.01 -1.42%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs