JC Penney to become JC Gold???

By Bill Ackman

I have had the opportunity to spend time with Ron Johnson over the last nine months as he finished his career at Apple and began planning for his leadership role at JCP. Based on this experience and my assessment of his talents, creativity, and relevant expertise, I expect to look back on the decision by the company to hire Ron, and our role in identifying and recruiting him, as one of the most significant contributions that we have ever made to any company over the life of our firm.

One of the benefits of hiring a superstar CEO is the quality of the talent he can recruit. Ron recently hired Michael Francis to be President of JCP, a former colleague and a 22- year veteran of Target who was likely to be Target’s next CEO. Michael is considered by many in the retail community to be the best marketer in the business. For the last 10 years, Michael ran Target’s marketing and arranged deals with high-end designers who developed lower-cost lines for Target–the company’s recent Missoni deal is such an example–and drove the brand’s reputation as a high quality, high-fashion discount retailer.

Last week, Ron announced that Michael Kramer, CEO of the Kellwood Company, a private-equity-backed manufacturer and marketer of apparel and soft goods, would become COO of JCP. Before Kellwood, Michael was Executive VP and CFO of Abercrombie & Fitch. Prior to Abercrombie, Michael worked with Ron at Apple as the CFO of Apple Retail.

Daniel Walker recently was hired as Chief Talent Officer. Dan began his career at Federated Department Stores and later joined the GAP under Mickey Drexler where he worked to recruit talent during the GAP’s period of rapid growth and profitability. Afterwards, he was hired by Steve Jobs to serve in a similar capacity recruiting the talent that launched the iPod, iPhone, iPad, Apple and App stores. Dan is the best in his business and we expect he will make an enormous contribution to the transformation of JCP.

JCP will not be transformed overnight, although you should expect to see new marketing and merchandise presentation as well as organizational, structural, and cost control changes over the next year with the bulk of product changes beginning in 2013.

We expect our investment in JCP to be a long-term holding for the funds, and we have high expectations. We don’t buy 26% stakes and join boards of directors unless we believe an investment has enormous potential.