The Anglo-Zanzibar War of 1896 lasted just 40 minutes and still holds the record as the world's shortest war. But now, thanks to the sudden resignation of its outspoken activist board member, The J.C. Penney War of August 2013 can now claim second place, clocking in at just five tumultuous days.
This as the ailing retailer's largest shareholder, William Ackman of Pershing Square Capital Management, moved to squelch the crisis he started and surrendered his seat on the board. While there doesn't appear to be any casualties resulting from this bizarre skirmish, the after-effects are likely to linger for the foreseeable future -not all of which are bad.
"It's a huge, huge Win for J.C. Penney (JCP)," my co-host Jeff Macke says attached video, likening Ackman's unexpected armistice to a "Hail Mary pass" in football. "It's a big outcome and now the question is, are the creditors appeased - CIT - and can the company actually find a new CEO by explaining that the troublemaker is gone?"
The troublemaker may be gone, but J.C. Penney's troubles are far from over. While the company's chairman and interim CEO have retained their jobs and appear to have the backing of the board, the structural and financial problems that have plagued the Texas-based company for the past 18-months are still very much in place. This will be abundantly clear next Tuesday when the operator of 1,100 department stores with 116,000 employees reports its ninth consecutive quarter of declining sales and its eighth consecutive quarterly loss.
In the meantime, Ackman still reportedly owns an 18% stake in JCP, a losing position from which he might have been looking to make a graceful exit since April, following the disastrous losses and humiliating departure of Ron Johnson, the former Apple executive he helped place in the top job.
So far, the five-day board battle has netted Ackman less than a five percent bump in a stock that's fallen 33% this year. Longer term, it remains to be seen if the company's stabilization and turnaround efforts will bear fruit and bequeath the next CEO with a suitable platform to expand upon. Given some breathing room and a little time, the prospects of success surely look better today than they did yesterday.
Finally, with a chunk of available time now open in his day planner, one can only expect that Bill Ackman will shift his attention and tactics to his newest and largest pursuit -Air Products (APD), where he holds about a 10% stake worth some $2.2 billion.
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