In today's Weekly Media Mix, how Louis C.K. makes chicken, plus an artist plays with her food
The Daily Meal brings you the biggest news from the food world.
Chefs and Personalities
Here is Charlie Sheen's personal chef, sharing what she makes for the hot-headed celebrity: soft pretzels, mixed nuts, and Jell-O shots. For snacks: raw ginger. [People]
And here is Louis C.K's recipe for baked chicken: "Lots of lemon, garlic, and olive oil, salt, paprika, pepper. Just tons of all that and cook that f*cker at 450 for an hour then turn it down." [Grub Street]
Caribou Coffee is still dealing with the public backlash after announcing the closing of 80 stores. [Forbes]
Burger King's CEO is leaving to head up the H.J. Heinz Company, which was just bought by Burger King parent 3G Capital and Berkshire Hathaway. [NRN]
Malaysian artist Hong Yi created fun illustrations every day with her food, the canvas being a white plate. [This Is Colossal]
A "face-off in POST-APOCALYPTIC cooking" show is casting for Survivor-esque participants. [Eater]
Sad for Martha Stewart: The domestic diva's company lost a bid to dismiss Macy's claim that Stewart's brand violated its contract when it designed products for J.C. Penney. [Reuters]
Watch Ron Swanson make the Ron Swanson banana burger: take half a banana, stick it inside a bacon cheeseburger, and mash it down. [Eater]
Federated Moves to End Bidding War
As the takeover war for Federated Department Stores Inc. entered its 10th week, the retailer's directors moved yesterday to bring the bidding contest between the Campeau Corporation and R.H. Macy & Company to an end by tomorrow.
In a letter to both bidders, Federated, which owns Bloomingdale's, Filene's, Rich's and other department stores around the nation, said it had adopted final bidding procedures to be followed by the two rivals.
''The auction has continued for some time,'' Federated asserted in its letter, 'ɺnd the board believes it is in the interest of all constituencies that it be brought to a conclusion.'' 'Maximize Value'
The letter said that a committee of Federated's outside directors met yesterday morning to '➭opt final bidding procedures, which will be designed to maximize value to Federated stockholders and be fair to all bidders.''
Those procedures, which Federated did not disclose, were due to be delivered to the contending companies in the early evening under tight security. ''You will be advised promptly of the procedures upon their adoption,'' Federated told Campeau and Macy. ''It is anticipated the board will consider and act on the final bids at a meeting Wednesday.''
Macy has still not responded with a new or amended bid to last Tuesday's revised, $6.6 billion offer by Campeau. Any new Macy proposal was being kept under wraps in an effort to prevent a leak to the Campeau forces before the deadline.
Because of Macy's prolonged lack of response, however, some skepticism is rising among financial people that Macy will sweeten its last offer. But others believe that Macy and its advisers are simply playing a waiting game. A Macy spokesman said yesterday that he could not comment. Macy Expected to Offer More
AOL Described as 'Stabilizing'
America Online is ''stabilizing'' after losing subscribers for six consecutive quarters, Richard D. Parsons, the chief executive of its parent, Time Warner, said at the company's annual meeting. Mr. Parsons reiterated that Time Warner might make a bid for Adelphia Communications, the cable company. [C4.]
Stocks Edge Up as Oil Prices Ease
Stocks rose after a call by Saudi Arabia for higher oil production drove oil prices below $40 a barrel, easing worries that soaring energy costs could derail the recovering economy. The Dow Jones industrial average rose 29.10 points, or 0.3 percent, to 9,966.74, while the broader Standard & Poor's 500-stock index gained 4.37 points, or 0.4 percent, to 1,093.56. The Nasdaq composite index ended up 15.50 points, or 0.8 percent, to 1,912.09. [C4.]
No Political Rebound With Jobs
Despite a big rebound in hiring over the last several months, President Bush has been unable to translate the economic improvement into political benefit, leaving Republicans increasingly anxious that the White House might let slip away its best chance to counter the bad news from Iraq. [A1.]
Mitsubishi Outlines Cost Cuts
Mitsubishi Motors outlined sweeping steps to cut costs, including closing an assembly plant in Japan, cutting nearly a third of its nonfactory employees and scaling back production overseas. [C3.]
Airlines Drop Fare Increases
American Airlines, Continental Airlines and three other carriers dropped a fare increase after Northwest declined to match it. [C2.]
Verizon Sells Business in Hawaii
Verizon Communications said that it had agreed to sell its phone line business in Hawaii to the Carlyle Group for $1.65 billion. [C4.]
Showdown on 34th Street
J.C. Penney Co. unveiled its first Manhattan store on Friday, marking a milestone in chief executive Myron E. Ullman III's five-year attempt to turn his company into a stylish alternative to the giant down the road, Macy's Inc.
That giant also happens to be his old employer, where a takeover battle robbed him of the CEO job more than a decade ago.
The store is one half of a consumer test in a laboratory the size of a single city intersection, with each retailer taking a page from the other's playbook. On one corner, J.C. Penney, long a seller of cheap basics to Middle America, highlights trendy new lines made by designers like Ralph Lauren and Charlotte Ronson for Penney's own brand names. On the other corner, Macy's, famous for stylish brands, is pushing both its designer labels and its "Everyday Value."
Their struggle is playing out across the country as a long-term reshaping of the retail industry, combined with an unrelenting recession, blurs the lines between retailers that never used to compete. Specialty shops like Gap Inc., discount chains such as Wal-Mart Stores Inc., and traditional department stores are now all descending from different parts of the industry to lure the same shoppers.
Mr. Ullman's own role in that fight is part of a journey that started across the street from his new store. As chief executive of Macy's in the early 1990s, Mr. Ullman tried to fend off a hostile bid from Federated Department Stores Inc. He lost, and Federated used the Macy's brand to secure its position as the country's largest department store chain.
Campeau Gets Federated Macy’s to Buy Bullock’s
Campeau Corp. won its two-month takeover battle for Federated Department Stores on Friday, but rival R. H. Macy & Co. will walk away with three venerable names in California retailing: Bullock’s, its high-brow cousin Bullocks Wilshire, and I. Magnin.
A tenacious Campeau will end up with one of the nation’s largest retailers in the biggest non-oil takeover in U.S. history. The Canadian developer agreed to buy Federated for $6.6 billion, and with it comes some “crown jewels” of retailing.
Campeau will acquire such imposing names as Bloomingdale’s in New York, Burdine’s in Miami and Rich’s in Atlanta, but it will also be forced to sell some. In getting financing for the deal, Campeau has, for instance, agreed to sell classic clothier Brooks Bros. to a British firm.
Macy’s agreed to buy Bullock’s, Bullocks Wilshire and the tony I. Magnin of San Francisco, for $1.1 billion. As a result, it will get a long-sought spot in the lucrative--but highly competitive--Southern California department store industry.
At the Bullock’s store in the South Coast Plaza, shoppers were divided over the prospect of Macy’s taking over.
“Bullock’s is my favorite store. I don’t like nice things to change,” said Pam Andrusko, 45, a sales manager from Costa Mesa who said she has never been to a Macy’s store. “When corporations are bought, people have to pay for them. They do it by taking money out of the business. I think (Bullock’s) will change for the worst.”
But Lynn Porter, 18, an accountant from Anaheim, was excited. “I like Macy’s,” she said “There’s one in San Francisco and one in New York and it’s really neat. But they shouldn’t change the name. Bullock’s has really established itself--especially here at South Coast Plaza--as a really nice place to shop. Changing the name wouldn’t really achieve anything.”
There was no official word on whether Bullock’s name would be dropped in favor of Macy’s, but Bullock’s chairman, James E. Gray, said he thinks Macy’s should keep it. Gray also said he anticipates few changes immediately.
“I think people are glad to have it finally concluded,” he said. “Now we can get on with the transition period and finally reassume business.”
Industry experts said that ripples from the Federated takeover will be felt by retailers nationwide and it is likely to shake up things among Southern California department stores and supermarket chains.
Campeau has said it will sell Ralphs Grocery, the only supermarket chain in the Federated collection of stores. The sale of Ralphs, combined with Vons pending purchase of Safeway supermarkets in Southern California, might have an impact on grocery bills throughout the area, analysts said. There was no announcement Friday on how soon Campeau or Federated might move on a sale.
The takeover agreement seemed to provide Macy’s and Campeau the parts of Federated they coveted most, analysts said.
“Everybody got a piece of the pie,” said retailing analyst Walter F. Loeb at Morgan Stanley & Co., a brokerage firm. “Macy certainly got a reward by getting a presence in a market (Southern California) it was not in before and an upscale specialty retailer.”
Campeau, Loeb said, “got the gem of them all--Bloomingdale’s. Once you have Bloomingdale’s you have the jewel of American retail.”
Campeau might expand Bloomingdale’s because of its name and reputation, Loeb said.
Campeau agreed to pay $73.50 a share for Federated’s 88.5 million shares. The $6.6-billion bid is considered high by many analysts and is $2 billion greater than Campeau’s original bid, made in late January.
Macy’s seems to have gotten what it wanted most out of a merger with Federated. Macy’s chairman, Edward S. Finkelstein, said in a statement: “Acquiring Bullock’s and I. Magnin at a fair price is an attractive way to resolve this matter. We are especially pleased with this outcome since they are two of the Federated divisions in which we were most interested. Their acquisition enables us to achieve an important strategic objective--expanding Macy’s presence in California.”
Many have speculated on what Macy’s will do with Bullock’s and Bullocks Wilshire, two highly regarded and successful Southern California retailers. Macy’s already operates stores in Northern California.
Thomas H. Tashjian, vice president of retail trade at Seidler Amdec Securities, said Macy’s has made a smart move in acquiring the Bullock’s and I. Magnin chains rather than starting a new Macy’s chain in Southern California. “The department store pie is not broken up into more pieces,” he said. “It’s nicer to buy a competitor than add a competitor, particularly in a mature business like the department store business.”
Macy’s is regarded as a savvy and aggressive retailer. But Southern California department store executives did not seem to be worried about having to compete against Macy’s.
“This is an arena where we’ve learned that you do your own thing and not worry about the others,” said Edgar S. Mangiafico, chairman of May Co. California. “Just do what we’re doing and do it well and it will take care of itself.”
Philip M. Hawley, chairman of Carter Hawley Hale Stores of Los Angeles, owner of The Broadway, declined to comment, according to a spokesman. The spokesman also said Broadway chairman Michael Hecht would not be available for comment.
Campeau is expected to sell off other pieces of the Federated retail empire--one of the nation’s largest retailers, which posted sales of $11.1 billion last year and has 133,000 employees--to reduce its debt. Campeau carved off another retailer--Allied Stores Corp.--in 1987 after a long and bitter takeover at the end of 1986.
Campeau has already agreed to sell two other Federated divisions--Foley’s in Texas and Filene’s in Boston--to May Department Stores of St. Louis. And, Campeau will sell its Brooks Bros. division to British retailer Marks & Spencer for $720 million.
Robert H. Morosky, president of Allied Stores Corp., which was taken over by Campeau two years ago, will lead the combined Allied-Federated operations. Morosky said Campeau planned to sell off Federated’s supermarket, discount store and specialty store chains, as well as some of its department store chains to help pay off the debt.
That would leave the company with the Rich’s, Lazarus, Goldsmith’s, Burdine’s, Bloomingdale’s and Abraham & Straus department store chains, Morosky said.
“These are the crown jewels . . . that have a long history of being important and very successful,” he said in an interview with Associated Press. Morosky described the acquisition, as “a once-in-a-century opportunity.”
Analysts said other regional department store companies might expand and increase their power by picking up smaller Federated divisions, which include Abraham & Straus of New York, Burdine’s of Florida and Lazarus of Ohio.
“I do feel that this marks a major shift of power in the U.S. retailing industry,” Loeb said. The battle for Federated began in late January when the company of Canadian developer Robert Campeau surprised the retail industry with a $4.2-billion bid for Federated. Campeau, analysts said, was attracted primarily by Federated’s valuable real estate holdings and store leases.
Although regarded as a creative retailer, Federated’s heavy expenditures to develop new stores proved a drag on profits. As a result, its stock price suffered, making it an attractive takeover target.
The agreement was met by some sadness over the loss of another notable retailer to takeovers. “The problem I see with this takeover,” said Loeb of Morgan Stanley, “is that a fine retailer has been dissected.”
Still, he added, “Federated and everybody else wants to go back to work.”
Contributing to this story were Times staff writers Mary Ann Galante, Linda Williams and Nancy Yoshihara.
PICKING UP THE PIECES Campeau’s $6.58-billion agreement to buy Federated Department Stores would affect not only some of Federated’s stores but also some chains owned by Allied Stores, a division of Campeau.
What Happens to Federated Department Stores
Bullock’s: Los Angeles-based chain being sold to Macy’s, along with the Bullocks Wilshire stores.
I. Magnin: San Francisco-based fashion retailer being sold to Macy’s.
Ralphs: Compton-based grocery chain is for sale. Ralphs management and Lucky Stores are top contenders.
Bloomingdale’s: New York-based chain was bought by Campeau.
Filene’s: Boston-based chain is to be sold to May Department Stores.
Foley’s: The Texas chain is to be sold to May Department Stores.
Other Stores: In late January, Campeau said that--if successful--it would consider selling the Gold Circle discount chain, MainStreet apparel chain, Children’s Place apparel stores, and a new chain called Accessory Place.
What Happens to Allied Stores
Brooks Bros.: Campeau to sell chain to Marks & Spencer, the British clothier.
Other stores: Campeau said it may have to sell some Allied or Federated stores in areas where both companies have stores. Allied operates Jordan Marsh and Maas Bros. in Florida, where Federated operates Burdine’s. Also, Allied owns Sterns in New York, where Federated owns Bloomingdale’s and Abraham & Strauss.
Ivanka Trump: The 'Anti-Donald' works to protect the billion-dollar brand
While her 69-year-old father bashes Chinese leaders for "ripping us off" and "sucking us dry," Ivanka Trump shares a video on Instagram of her 4-year-old daughter singing a Chinese New Year song in Mandarin.
With the elder Trump off running an increasingly polarizing campaign for president, Ivanka Trump has been stepping up her profile in the family's real estate empire, where she is seen as the "anti-Donald" protecting the family's billion-dollar brand.
Last week, while Donald Trump was retweeting an unflattering picture of the wife of Sen. Ted Cruz, escalating their feud in the Republican presidential race, Ivanka was tweeting tasty recipes — spiced cauliflower and stuffed artichokes with peas and dill.
And Sunday evening Ivanka Trump, 34, brought her family more feel-good headlines and social media buzz when she gave birth to her third child, a son named Theodore James Kushner.
Just as consistently as her father spews inflammatory statements - "torture works" and "Islam hates us" — Ivanka offers her 1.8 million Twitter followers tips on such noncontroversial topics as sleeping better and dressing "chic" for #WomenWhoWork.
It's not, however, easy to keep politics separate from business. This month, Ivanka Trump's own line of shoes, clothes and accessories was removed from the Trump Organization's main site as critics pointed out that much of her merchandise is made in China or other foreign countries even as her father bashes U.S. companies for moving work overseas.
Usually, though, it's Ivanka Trump's burden — as executive vice president of development and acquisitions — to deal with trouble her father stirred up. She lost two acclaimed chefs at the family's $200 million Washington hotel project after Donald Trump described some Mexican immigrants as criminals and "rapists."
New York Mayor Bill de Blasio, a Democrat, said he would no longer do business with the Trump company. Elected officials in Vancouver and Toronto asked the owners of the family's buildings there to strip the Trump name from them.
Carefully scripted, Ivanka shies from the TV news shows her father thrives on, but she is increasingly appearing in Vogue, Elle Decor and other glossy magazines primarily aimed at women. She talks about balancing parenting and work and wears designer outfits and looks picture-perfect. No floppy suits, no flyaway hair. And never an off-the-cuff, outrageous statement.
This year, she has also crisscrossed the country, standing beside her father "playing a valuable role in softening his image," as former Trump adviser Roger Stone said.
At Mary Ann's Diner in Derry, N.H., she greeted diners and posed with waitresses, urging them to vote for her father but ducking questions from reporters, saying, "I am just a daughter supporting her father."
Her approach — being the balm to her father's sharp stings — appears to have paid some dividends. Although Macy's dropped her father's lines of ties and suits after his remarks about Mexicans, the retailer continues to sell Ivanka's products. She found a new restaurant for the D.C. hotel project, construction has continued on pace and owners of the Canadian projects ultimately stuck with the Trump name.
Ivanka Trump declined to be interviewed for this article, and she has hired public-relations experts to field her calls and try to spread the word that she is focused on her family and business — not politics. Many see her unerring focus on agreeable subjects like food and parenting as a calculated move to protect the business.
When asked why Ivanka avoids political comment, a person who works for her said, "Both Republicans and Democrats buy Ivanka Trump."
While her father is being pilloried throughout Latin America, Ivanka Trump was just given the celebrity treatment on the cover of the Spanish-language Jetset magazine in Colombia. The article called her father "the outrageous candidate" but described Ivanka as "glamorous" and the "power" behind the business.
Still, one branding expert believes that the businesses remain vulnerable — particularly in countries where her products are popular yet where his comments have caused outrage.
"That's where I think the campaign could really hurt her," said Carol Spieckerman, a branding and retail consultant. "So I think she has to be even more careful and more deliberative in managing her image and brand abroad."
Rob Frankel, a national brand specialist, said it takes a lot to commit brand suicide: "Remember: Martha Stewart was thrown in jail, and that was not the end of Martha Stewart. She established a healthy brand."
But it is a smart move to add in the safer "Ivanka elements" — a millennial and working mom not engaging in divisive politics — to the "master Trump brand," Frankel said.
"She carefully considers her words when she speaks she's measured and thoughtful," said Suzanne Hill, an environmental planner who has been in meetings with Ivanka as she has taken the lead on the Trump hotel project a few blocks down Pennsylvania Avenue from the White House. "She is very different from her father."
One of the few times she comes close to making a partisan statement is when she repeats her father's signature slogan — "Make America Great Again!" — in videos, like the ones widely shared in Iowa last month and Utah this month where she urges people to vote for her father. More typically, she tells voters in YouTube videos, digital ads and appearances that her father is a great dad who told her "I could do anything I set my mind to."
A former model who has appeared as a judge on the "Apprentice" reality TV show hosted by her father, Ivanka has shown a Trumpian knack for attracting media attention.
Last month, she was on the cover of Town & Country magazine and used the feature to responded to claims that her father has made sexist remarks. "He 100 percent believes in equality of gender," she said.
This month, Ivanka is in Cosmopolitan magazine, saying she is "wholly focused on the growth of my own company — my lifestyle brand and IvankaTrump.com, a digital destination for women who work." She said she is working with her brothers "to expand the global footprint of the Trump Organization."
Ivanka's lifestyle is also distinct from her father's. She is married to Jared Kushner, a real-estate mogul and publisher of the weekly New York Observer, who comes from a well-known Democratic family. She is friendly with Chelsea Clinton, who is also expecting a baby and campaigning for her mother. The two daughters have not been seen together recently, since their parents have begun to publicly shred each other.
Ivanka Trump converted to Judaism before she married into Kushner's Orthodox Jewish family in 2009. She has spoken about how she, her husband and two children observe the Jewish sabbath, from sundown Friday to sundown Saturday — keeping away from phones for 25 hours and using it as a time to concentrate on family.
Donald Trump has told Jewish groups that he can't call his daughter during that time. And, last week, at the American Israel Public Affairs Committee conference in Washington, D.C., Trump make a point of saying that any day now "my daughter Ivanka is about to have a beautiful Jewish baby."
"Priorities are more important — you can't plan to balance," Ivanka Trump said in a Washington Post interview in 2013. "Something comes up . either a deal or . an emergency at home. . So anyone tries to strive for balance normally winds up at a loss. . I try and ask myself the question at the end of every day, 'Were my priorities in order?' "
Until the last days of her pregnancy, Ivanka had been more visible on this campaign trail than her stepmother, Melania Knauss, Trump's third wife, who was born in Slovenia. In fact, it was Ivanka who went to the microphone in the Trump Tower in Manhattan to introduce her father when he announced his candidacy last year.
Ivanka's mother is Ivana Trump, the athlete and fashion model from the former Czechoslovakia and Donald Trump's first wife. Famously, Ivana advised women who were divorcing: "Don't get mad. Get everything!"
Ivana and Donald Trump also have two sons who work in the family business and have hit the campaign trail. Trump has another daughter with his second wife, Marla Maples, and a young son with Knauss. But it is Ivanka who is best known of the next generation of Trumps and who is developing a growing following of her own.
Lately, she has been spending a lot of time designing and building the luxury hotel in Washington, scheduled to open in September a few blocks from the White House.
Thomas Luebke, secretary of the U.S. Commission of Fine Arts, was one of those who met regularly for months with Ivanka and her team to hammer out the reuse of the historic Old Post Office Pavilion, often in a cramped government office room. "She's young, so some of this stuff would be new. You could see her trying to figure it out — the wheels turning for her." He said that Ivanka was always "very well prepared and very professional."
She didn't get everything she wanted and showed a willing to compromise, others said. The Trumps would have preferred to own the building, not lease it for 60 years, as they agreed to. The D.C. Preservation League raised a number of concerns about how the former post office would be redeveloped, such as when Ivanka proposed "something a little glam, a little baroque" for the interior courtyard, according to the group's executive director, Rebecca Miller. She said that Ivanka listened and that the glitz was scaled back.
"She was very knowledgeable about the process, obviously very involved, not just a face piece," Miller said.
Ivanka, after studying two years at Georgetown University, transferred to the Wharton School at the University of Pennsylvania, her father's alma mater. And, like her father, she appeared on "The Apprentice," wrote a best-selling book ("The Trump Card: Playing to Win in Work and Life") and has offered tips on the art of negotiation.
Now many wonder if she will one day follow her father's footsteps in politics.
"I just don't know if she has any interest in it," said Stone, the former Trump adviser, adding that she is now focused on raising her children and running her business.
Then again, he added: "There was also a time when that was true for Donald Trump."
Honors and dubious distinctions
Judge Coleman had remanded an Illinois suit against Clearview to Cook County Circuit Court, which along with Madison and St. Clair counties has been declared the eighth worst “judicial hell-hole” in the country by the American Tort Reform Association, as Illinois Policy reports.
The Association puts the blame squarely on the state legislature, saying that the excessive litigation costs the state 100,000 jobs and nearly $10 billion, citing a study by the Perryman Group.
In addition to biometrics lawsuits, asbestos liability is identified as a top source of litigation.
As every year, the Illinois Trial Lawyers Association rejected the report as “a public relations stunt” bankrolled by big businesses to protect negligent behavior.
Edelson PC has been declared ‘Class Action Group of the Year 2020’ for its role in the Facebook settlement by Law360.
The company says an investigative approach to finding cases is behind its success, which also includes a $925 million jury verdict, and a $45 million settlement with DeVry University in a false advertising suit.
The Facebook settlement is also one of five BIPA cases that marked major developments during the year, according to another Law360 article.
“For a statute that’s been around for years, suddenly it’s everywhere. You don’t want to be caught unaware,” said Jeff Rosenthal, a Blank Rome LLP attorney who leads the firm’s biometric privacy team. was a really important year in this area of law.” Rosenthal’s associate in Blank Rome’s biometric privacy team David Oberly wrote about the impact of the Facebook settlement in a Biometric Update guest post earlier this year.
Other major cases include the 7th Circuit Appeals Court ruling in Bryant v. Compass that collecting biometric data from workers without their informed consent establishes standing in federal courts.
One claim in a suit under Illinois Biometric Information Privacy Act (BIPA) against Compass, meanwhile, has been dismissed without prejudice, according to Law360. The decision hardly counts as a win for the biometric vending machine company, as it is made in recognition of Compass’ failure to provide biometric data retention and destruction guidelines, as required by BIPA.
“One cannot fail to comply with guidelines that do not exist,” U.S. District Court Judge Virginia M. Kendall ruled.
Kendall rejected Compass’ other dismissal arguments, including that they are past their eligible time period, and that BIPA is “special legislation” prohibited by the state constitution.
A recent decision in Raven Fox et al. v. Dakkota Integrated Systems by the 7th Circuit Appeals Court clarified that the data retention schedule violation remanded back to state court in the Bryant case was a mere procedural violation, whereas the violation of the full range of 15(a) duties by Dakkota led to the data’s unlawful retention, according to that suite, giving the claim federal standing.
The rejection of the argument in McDonald v. Symphony Bronzeville Park LLC that workers’ compensation pre-empts BIPA was also among the top five impactful cases for the biometric data privacy statute, along with a pair of cases showing collective bargaining agreements can pre-empt BIPA.
JC Penney: Can this company be saved?
NEW YORK (AP) — J.C. Penney late Monday brought back former CEO Mike Ullman after Ron Johnson's risky turnaround strategy backfired and led to massive losses and steep sales declines.
But will Ullman try to save the struggling retailer or just keep the seat warm until the board hires a fireballing successor?
Penney's board of directors ousted Johnson as CEO Monday after only 17 months on the job and rehired Ullman, 66, who was CEO of the department store chain for seven years until November 2011.
The announcement came after a growing chorus of critics, including a former Penney CEO, Allen Questrom, called for Johnson's resignation as they lost faith in an aggressive overhaul that included getting rid of most discounts in favor of everyday low prices and bringing in new brands.
The biggest blow came Friday from Ullman's strongest supporter, activist investor and board member Bill Ackman. Ackman had pushed the board in the summer of 2011 to hire Johnson to shake up the retailer's dowdy image. Ackman, whose Pershing Square Capital Management is Penney's biggest shareholder, reportedly told investors that Penney's execution "has been something very close to a disaster."
On Saturday, Ullman received a phone call from Penney Chairman Thomas Engibous asking him to return to his old job, according to Penney spokeswoman Kate Coultas. The board met Monday and decided to fire Johnson.
Neither Johnson nor Ullman was available for an interview for this story.
Early investor reaction to the shake-up was negative. J.C. Penney shares (JCP) fell $1.44 or 9% in early trading to $14.43.
Until early last week, some analysts thought the board would give Johnson, a former Apple and Target executive, until later this year to reverse the sales slide. A key element of Johnson's strategy was opening "mini-shops" in Penney stores featuring hot brands. They began opening last year and had been faring better than the rest of the store.
"I truly believed that he had until holiday 2013," said Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisers. Monday's announcement "is an indictment of his (Johnson's) strategy."
Under incoming CEO Ullman, the chain brought in new brands such as beauty company Sephora and exclusive names like MNG by Mango, a European clothing brand. But he didn't do much to transform the store's stodgy image or to attract new customers. Ullman is expected to serve mostly as a stabilizing force, not someone who will make the kind of changes that will completely turn the company around.
"What they need is a little bit of stability and essentially adult supervision," said Craig Johnson, president of Customer Growth Partners, a retail consultancy. "(Ullman) did nip-and-tuck surgery. But this was a place that needed radical surgery."
Sozzi believes Ullman will serve as an interim CEO. He expects the Plano, Texas, company's board to hand the job to another executive who may want to take the company private.
Ullman is getting a base salary of $1 million and the company didn't sign an employment agreement, according to a Securities and Exchange Commission filing.
Johnson's removal marks a dramatic fall for the executive who came to Penney with much fanfare. There were lofty expectations for the man who made Apple's stores cool places to shop, and before that, pioneered Target's successful "cheap chic" strategy by bringing in products by people such as home furnishings designer Michael Graves at discount-store prices.
Few questioned Johnson's savvy when Penney hired him away from his job as Apple's retail chief in June 2011 to fix a chain that had gained a reputation for boring stores and merchandise.
But Johnson's strategy led to sputtering sales and spiraling losses. The honeymoon with Wall Street ended soon after customers didn't respond favorably to his changes. Johnson revised his strategy several times to try to bring back shoppers, with little success.
The turnaround plan was closely watched by industry observers who wanted to see if Johnson could actually change shoppers' behavior. The plan failed. And now worries are mounting about the company's future.
Penney's stock price Monday showed investors' frustration with Johnson and it's uncertainty about Penney's future. When news began to leak after the market closed that Penney was ousting Johnson, the stock, which had closed at $15.87 in the regular session, climbed nearly 13% to $17.88 in after-hours trading. But after Penney announced Ullman would take over, the stock reversed course, falling as far as 11% from its regular closing price, to $14.10. That was 21% off its after-hours high.
Johnson's future at Penney became uncertain after the department store retailer reported dismal fourth-quarter results in late February that capped the first full year of a transformation plan gone wrong. Penney amassed nearly a billion dollars in losses and its revenue tumbled almost 25% from the previous year to $12.98 billion.
Under Johnson, 54, Penney ditched coupons and most of its sales events in favor of everyday low prices. It's bringing in hipper designer brands such as Betsey Johnson and updating stores by installing specialty shops devoted to brands such as Levi's to replace rows of clothing racks.
Johnson's goal was to reinvent Penney's into a trendy place to shop in a bid to attract younger, wealthier shoppers. The plan turned off shoppers who were used to heavy discounting. Once-loyal customers have strayed from the 1,100-store chain. It hasn't been able to attract new shoppers to replace them.
Initially, Wall Street supported Johnson's ideas. In a vote of confidence, investors drove Penney's stock up 24% to $43 after Johnson announced his vision in late January 2012. But as the plans unraveled, Penney's stock lost more than 60% of its value. Credit rating agencies downgraded the company deeper into junk status. On Monday, the stock closed down about 50% from when Johnson took the helm.
In one of the biggest signs of the board's disapproval of Johnson's performance, Johnson saw his 2012 compensation package plummet nearly 97% to about $1.9 million, according to an SEC filing last week. He didn't get any stock or option awards, or a bonus. In 2011, he had received a stock award worth $52.7 million on the day it was granted. The award was given to Johnson after he was named CEO and made a $50 million personal investment in the company.
In yet another blow to Johnson's turnaround strategy, Vornado Realty Trust, one of Penney's biggest shareholders, sold more than 40% of its stake in the company last month. The company's chairman and CEO, Steve Roth sits on Penney's board.
A court battle with department store Macy's over a partnership with Martha Stewart also has raised questions about Johnson's judgment. Macy's, which has had long-term exclusive rights to the Martha Stewart brand for products such as bedding and bath items, is trying to block Penney from opening Martha Stewart mini-shops, planned for this spring.
Macy's contends that Penney's deal with Stewart infringes its own deal. If Penney loses, it will have to take a big loss on the products that it ordered from Martha Stewart Living.
While acknowledging that Penney made some mistakes during the fourth-quarter conference call with investors, Johnson said Penney would start offering sales in stores every week. And it would bring back coupons.
Critics have said one of Johnson's greatest missteps was that he didn't test the pricing plan with shoppers. He argued that testing would have been impossible because the company needed quick results and if he hadn't taken a strong stance against discounting, he would not have been able to get new, stylish brands on board.
"Experience is making mistakes and learning from them, and I have learned a lot," Johnson said at the time. "We worked really hard and tried many things to help the customer understand that she could shop any time on her terms. But we learned she prefers a sale. At times, she loves a coupon."
During his tenure, Johnson had spoken of being around for the long-haul and referred to his plan as a multiyear strategy. His plans were only partially realized. Shops for Joe Fresh featuring brightly colored clothes were launched last month. A new home area sporting names like Jonathan Adler and Michael Graves is set to launch this spring. Other brands were expected to be unveiled as the stores transformed into a collection of up to 100 mini-shops.
But the company's board wasn't willing to wait. Now that Johnson is out, the worry on Wall Street is that Ullman won't be able to turn around business fast enough.
"Ullman is in a crisis zone," said Sozzi. "This is not a normal situation. He has a short window to get in and see what's wrong with the company and put a Band-Aid on the fundamental problems."
Associated Press Business Writers Candice Choi and Joseph Pisani contributed.
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Legal News Brief – April 12, 2013
TGIF! Before you head out for the weekend, check out your legal news headlines from Thomson Reuters News and Insight.
In gene case, Supreme Court to again address patent eligibility
The underlying issue in an upcoming case is one the justices have confronted relatively often in the last few years: What constitutes an invention that is eligible to be patented?
Post-bankruptcy, Tribune still fighting creditor attorneys
Lawyers who were hired by noteholders to take on the media company in the bankruptcy process now want their former adversary to pick up their tab.
Analysis: Critics of Libor antitrust ruling make their case
A judge’s decision to dismiss antitrust claims against the world’s major banks over manipulation of Libor came as a surprise to some legal experts.
Martha Stewart loses bid to dismiss Macy’s contract claim
The ruling may affect whether Macy’s rival J.C. Penney can sell Martha Stewart-designed home goods in bedding, bath and cookware under a “JCP Everyday” label.
Witness could help revive investors’ insider trading suit
A pair of investors said this week they expect former hedge fund executive Noah Freeman to cooperate with their case against his former firm, Sonar Capital Management.
Rancho Cucamonga mattress maker merges with British company
Rancho Cucamonga-based E.S. Kluft & Co. merged with a British company Wednesday with the goal of becoming one of the largest luxury bed manufacturers in the world.
Vi-Spring, a wholly owned subsidiary of Flex Group of Spain, agreed to purchase 51% of E.S. Kluft & Co. as part of the deal. The company has operations in Europe, Asia and North America. Flex Group has operations in Southern Europe and Latin America.
Earl Kluft, founder and chief executive of Kluft, will be the chief executive of the combined North American company. The manufacturer, known for its $33,000 king-sized Palais Royale mattress and box spring, sells its products at 12 major outlets such as Macy’s and Bloomingdales in the U.S.
The deal had been in the works for about a year and a half, Kluft said.
“We’re hoping to become the dominant luxury mattress manufacturer in the U.S. and we hope the whole world,” Kluft said. “This far exceeds any goal I ever had when I started.”
The 200 employees at Kluft’s California and Pennsylvania facilities as well as sales staff will retain their jobs. They expect to add 25 employees at their Pennsylvania plant by the end of the year, when they hope to start producing some of Vi-Spring’s products.
Vi-Spring also expects to keep its 100 employees, Kluft said.
The move will also expand Vi-Spring’s presence in the United States, where it opened its first store in the country three years ago. It recently opened a new plant in Sao Paulo, Brazil, and expanded its production capacity in Chile.
“For Vi-Spring and the Flex Group, this is a strategic move as we will accelerate our growth in the American market,” said Mike Meehan, Vi-Spring managing director.