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On top of plunging sales and a $1 billion loss last year, former JCPenney CEO Ron Johnson left the retailer with the construction department in disarray — and the mess has attracted the attention of the company’s legal team.
In-house lawyers at the struggling department-store chain are probing whether Penney’s construction team bent rules in an aggressive rollout of in-store shops at nearly 700 stores nationwide, The Post has learned.
Precise allegations under investigation couldn’t immediately be verified but numerous employees in Penney’s construction unit are being interviewed by members of the retailer’s legal and human-resources teams, according to insiders.
Some senior Penney execs, facing tight deadlines to roll out hundreds of in-store shops this spring, had been pressuring project managers at some sites to order contractors to work without legally required building permits, sources told The Post.
“Keep building, don’t worry about the permits,” one senior Penney construction exec told underlings in a meeting this spring, according to a source close to the retailer. “The message was, ‘This project must get done, and if you fail, JCPenney fails,’ ” the source said.
Benjamin Fay, a former Apple exec who was Johnson’s executive vice president of real estate and construction, left the company last week, sources told The Post.
Penney Chief Executive Mike Ullman, who took the reins from Johnson this month after being unseated as CEO in 2011, replaced Fay with Tom Clerkin, who had previously headed construction before taking an early retirement under Johnson, sources said.
There was no indication that either Johnson or Fay was implicated in the current probe, or that their departures were related to it, sources said.
Penney didn’t respond to requests for comment. Johnson and Fay couldn’t be reached for comment.
As first reported by The Post, Ullman this month has ousted several of Johnson’s top hires, including operating chief Mike Kramer, Chief Talent Officer Dan Walker and Chief Creative Officer Mike Fisher.
As Johnson pressed construction execs to meet deadlines, he shrugged off protests that his plan for a “Main Street” of in-store shops, with wider aisles and uniform ceilings, was tricky — and costly — for stores that varied wildly in size, layout and age.
“He was very adamant that there were no excuses,” one source said of Johnson. “He’d say, ‘Don’t come to me and say we can’t do this old store because it’s full of asbestos.’ He wanted to hear, ‘This is what’s being done to fix it.’”
“This was such a huge project that the time constraints that were put on it were just unrealistic,” according to one construction source. “You wouldn’t have such chaos if you weren’t doing 700 stores at the same time.”
Penney execs fired contractors when confronted with missed deadlines and bills that were riddled with costly change orders — then scrambled to find replacements. Contractors, in turn, blamed constant flip-flopping and waffling by Penney officials as they focused on minutiae, according to sources.
For example, Johnson and Fay went back and forth for a year on what the new signs on JCPenney stores should look like, a source said. Last summer, Fay got the idea for a plastic design with curved edges to yield a distinctive lighting effect.
When a sign manufacturer told Fay there was no plastic in existence that could be curved while meeting weight and heat constraints, Fay “told them they needed to find a chemist and come up with a new plastic,” according to the source.