3. Penney's Problems
Happy anniversary Ron Johnson! We sure hope you are enjoying this special milestone as much as we are.
We can barely believe it ourselves, but it's been a whole year since J.C. Penney (JCP) introduced Ron as its new CEO. It almost seems like yesterday when shares of the historic retailer jumped 17% to $35 on the news that the former Apple (AAPL) marketing whiz would take the reins. Even now we can see the pride in hedge fund manager Bill Ackman's eyes when he called Ron's hiring a "credit to the company" of which his Pershing Square hedge fund owns a 16.5% stake.Now, here we are 12 months later and it's amazing to see all Ron has accomplished for the $53.3 million in total compensation Penney's paid him in 2011. Let's see. The shares trade 30% lower than at this point last year, after the stock dropped an additional 3% Tuesday following Johnson's less-than-inspiring speech at an investor conference. The company's same-store sales came in worse than expected last month as a result of Johnson's admittedly "confusing" new pricing model. Its customers are fleeing because they can't use their coupons. Its employees -- the remaining ones -- are irate. Its stores are closing. Its losses are widening. Yep Bill, let's give the guy "credit", because he sure has had one heckuva monumentally crappy year. But just you wait, says Johnson, because once he gets done remodeling Penneys stores -- once again, the remaining ones -- then you'll see the stock really soar. "There'll be one year of sales going down that sets the stage for a year of take off," Johnson told attendees Tuesday. You got it Ron. We'll wait till next year before passing judgment. The question is, if this keeps up, will your shareholders wait for you as well? You know...the remaining ones.
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