NEW YORK (AP) — J.C. Penney's largest investor and former board member is bailing out.
William Ackman of Pershing Square Capital Management is selling his nearly 18 percent stake, or 39.1 million shares, in the struggling retailer, according to regulatory documents filed late Monday.
The move comes two weeks after Ackman resigned from J.C. Penney's board as part of a deal to resolve an unusually public battle between the activist investor and the struggling department store operator.
The news sent Penney shares down nearly 3 percent to $13 per share in after hours-trading after closing the regular session down 15 cents to $13.35. Penney's shares have lost nearly 70 percent of their value since early February 2012 when investor enthusiasm over former CEO Ron Johnson's retail strategy pushed the stock to around $43. That includes a 36 percent drop in value so far this year.
Some analysts say they were surprised by Ackman's plan to sell his shares so quickly.
"I didn't expect it to be so fast, but I can understand that he wants to put it behind him," said New York-based retail consultant Walter Loeb.
Belus Capital Advisors CEO Brian Sozzi agreed noting, "(Ackman) wants to cut bait and move on to something else."
Citigroup, the sole underwriter of the shares, will be shopping the stock around to prospective buyers. A price range wasn't revealed in the prospectus.
Ackman's sell-off comes as the beleaguered chain is trying to recover from a botched transformation plan spearheaded by its former CEO that led to disastrous financial results. The board ousted Johnson in April after only 17 months on the job and rehired Mike Ullman, who had been CEO of the retailer from 2004 to late 2011.
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 Ullman, who is expected to be an interim CEO.
Ackman initially purchased a stake in J.C. Penney in 2010. He joined Penney's board in February 2011 and had pushed the board to hire Johnson, a mastermind of Apple Inc.'s successful stores. Under Johnson's leadership, Penney got rid of most sales in favor of everyday low prices. He also brought in hip new brands and planned to remake the store as an indoor mini mall of sorts with 100 different in-store shops in an effort to woo trendier, more affluent shoppers. But those efforts alienated Penney's loyal customers.
Penney ended up recording nearly $1 billion in losses and a 25 percent drop in revenue in the fiscal year that ended Feb. 2, the first year of the transformation plan. Since returning to Penney's helm, Ullman is bringing back basic merchandise like loose-fitting khakis and restoring frequent promotions. But sales declines and losses continued into the first and second quarters as Johnson's legacy continued to cast a shadow on the results.