Business

Ackman’s JCP hubris hurt lives

If you search “failed retailers,” it won’t take more than a mouse click to realize that the junk heap of retailing history is littered with closed shutters, from Korvettes to A&S to Gertz — all once-iconic names that never had a chance at a turnaround.

Second lives in the retailing industry are as common as camera-shy Kardashians. In the rare event that they do happen, successful turnarounds have been led by die-hard, determined retailers like Macy’s Terry Lundgren.

That is why hedge-fund honcho Bill Ackman’s obsession with department stores (his most recent the failed makeover of JCPenney) is so perplexing.

What sort of ego drives an investor who has never managed a big business in his life to think he can turn around a retailing behemoth?

There are real human costs to Ackman’s ill-advised foray into retailing.

As JCPenney disclosed last month in its annual SEC filing, the company cut 43,000 jobs in 2012 — 27 percent of its work force. In an economy that can barely generate about 125,000 jobs a month, that is a highly significant number. It’s also more than double the 19,000 job cuts former JCPenney CEO Ron Johnson copped to a few months before the company had to come clean.

That’s 43,000 families who are now hurting badly because their company became a playground for a hedge man.

Meanwhile, at a luncheon last week, Ackman threw Johnson squarely under the bus.

“The execution, the basic blocking and tackling of running a retailer — that’s what Ron Johnson didn’t have,” said Ackman with a straight face as a real retailer, Myron Ullman, the man Ackman kicked out of the company, returned to his position as CEO.

So here we are. With Penney bleeding billions, the company has hired the Blackstone Group to find someone to turn it around. Will it work? Retailing history says not.

But Blackstone will get a sizable fee. Ackman’s Pershing Square Capital will get its cut for managing a position that has lost a quarter of its value this year. And the 43,000 JCPenney workers who lost their jobs as a result of this crazy caper will get nothing.

James Cash Penney must be rolling in his grave.