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Penney's board member Steven Roth resigns


September 13. 2013 7:36PM
Associated Press

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(AP) Steven Roth, the chairman and CEO of Vornado Realty Trust, has resigned from J.C. Penney's board, days after the real estate company told investors it planned to sell all of its stake in the struggling department store chain, according to regulatory documents filed Friday.


Vornado, which owns and manages commercial real estate such as office buildings and malls, sold more than 40 percent of its shares in Penney in March, a month before the department store chain fired its CEO Ron Johnson who had spearheaded a botched turnaround that led to disastrous results. Vornado still holds 13.4 million shares, or 6.1 percent, of Penney's stock.


Vornado had said at a recent conference that it plans to exit Penney in the "not-too-distant future," according to a regulatory filing. Penney said Friday that Roth, who joined the board in early 2011, said the decision was not the "result of any disagreement with the company or the board of directors."


The move comes a month after William Ackman of Pershing Square Capital Management and formerly Penney's largest shareholder resigned from the board and sold Pershing's entire 18 percent stake as part of a deal to resolve a public dispute between himself and the Plano, Texas, company.


Both Ackman and Roth joined the board in early 2011 and pressed for major changes after taking big stakes in Penney in 2010.


Ackman was the one who pushed the board to hire Johnson, the mastermind behind Apple stores. Ackman resigned from the board on Aug. 13 after he went public with statements saying he'd lost confidence in Penney's board and that Chairman Thomas Engibous should be replaced. Ackman and the retailer's board also were bickering over how quickly the company should replace CEO Mike Ullman. Ullman was Johnson's predecessor but was rehired when Johnson was dismissed.


Following Roth's resignation, Penney's board now comprises 10 directors, including Ronald Tysoe to fill Ackman's seat. Tysoe is former vice chairman of Federated Department Stores Inc., which has since been renamed Macy's Inc. Penney will appoint an additional director in the near future. Penney declined to offer any indication about who would fill Roth's seat.


Penney ended up recording nearly $1 billion in losses and a 25 percent drop in revenue in its fiscal year ended Feb. 2, the first year of the transformation plan. Sales declines and losses have continued into the first and second quarters as Johnson's legacy continued to cast a shadow on the results. Ullman is now working to stabilize the business by restoring more frequent sales and bringing back basic merchandise that was eliminated by Johnson.


Investors didn't react to the news as the move was expected. Penney's shares slipped 9 cents to $13.82 in regular markets and fell another 4 cents in after-hours trading.


In a report issued to investors on Friday, Deborah Weinswig, an analyst at Citi Research, said she doesn't believe that the pending sale will be a "significant overhang" for Penney given the solid demand seen when Pershing Square sold 39.1 million shares.


Earlier in the month, Glenview Capital Management disclosed in a regulatory filing that it owns about 20.1 million shares of J.C. Penney, or a 9.1 percent interest. This makes Glenview the biggest shareholder in J.C. Penney, according to FactSet.


Hayman Capital Management also announced in a filing that it owns 11.4 million shares, or 5.2 percent, of Penney. That makes Hayman J.C. Penney Co. Inc.'s sixth-largest shareholder.


Associated Press


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