Ackman was seen beaming in January 2012 as Johnson presented his reinvention plan to an audience of analysts, investors and big-name designers including Ralph Lauren and Calvin Klein. The plan called for the elimination of most discounts in favor of "every day" lower prices. Johnson also wanted to carve Penney into mini-shops devoted to brands or types of merchandise.
The new pricing plan started Feb. 1, 2012, and was an instant disaster. Sales plummeted, and so did investor confidence.
Penney amassed nearly a billion dollars in losses and its revenue dropped 25 percent for the fiscal year that ended Feb. 2 in the first year of the failed transformation strategy. Ackman remained Johnson's supporter until weeks before he was fired.
Since coming back to Penney in April, Ullman has worked to stabilize the business by bringing back basic merchandise and more frequent sales eliminated by Johnson in a bid to attract younger, hipper customers. Many analysts believe traffic is improving but have seen no evidence of a turnaround yet.
There are also increasing concerns about Penney's liquidity. Earlier this month the retailer said it expects to finish the second quarter with about $1.5 billion in cash on its balance sheet. That was less than some analysts expected.
Penney is scheduled to release its second-quarter financial results Aug. 20. Analysts expect a 7.9 percent decline in revenue at stores open at least a year, according to FactSet.
These figures are a key indicator of a retailer's health because they exclude revenue at newly opened stores.
Michael Cipriani of Rosenthal & Rosenthal, a lender in the clothing industry, said that last week it put Penney's suppliers on a short leash, financially backing orders for Penney for just two to three weeks out. The move was intended to limit its exposure until it can see how Penney succeeds with its turnaround efforts.
Rosenthal & Rosenthal is what is known as a "factor," a business that makes cash advances to suppliers based on the goods they sell to the merchant. The decision was made based on financial information and the boardroom warfare taking place, Cipriani said.
The lender only represents 1 percent of Penney's suppliers, but it move underscores how uneasy vendors have become.
If vendors and factors become wary of a store's creditworthiness, the retailer may have to pay suppliers cash upfront for goods, which can drain cash quickly.
Walter Loeb, a New York-based retail consultant, however, says that what's important is that Penney still has support from the major suppliers.
Loeb said the addition of Tysoe to the board will "strengthen the financial stability." He noted that in the late 1990s, Tysoe helped Federated Department Stores come of bankruptcy and avoid a takeover by real estate magnate Robert Campeau.
Penney's stock was down nearly 4 percent, or 49 cents, to $12.68 Tuesday. The share price has fallen nearly 38 percent since the beginning of the year and almost 70 percent since early last year when Johnson unveiled his transformation plan.
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