Vornado Realty Trust is backing away from J.C. Penney Co. Inc. now that its effort to reshape the retailer alongside activist investor William Ackman has produced a year of steep losses and a dramatic stock decline.
This story first appeared in the March 6, 2013 issue of WWD. Subscribe Today.
Vornado said late Tuesday in a regulatory filing that it sold 10 million Penney’s shares to Deutsche Bank at $16.03 each. Rumors of that sale helped push the retailer’s stock down by 10.6 percent Tuesday to $14.96 as Wall Street rallied to a new all-time high.
Penney’s stock has fallen 29.3 percent since the company reported an annual loss of $985 million last Wednesday, leaving it with a market capitalization of just $3.28 billion.
Steven Roth, chairman of Vornado, sits on Penney’s board and has been taking heat for the investment. Vornado’s shareholders approved of the sale and on Tuesday pushed the real estate firm’s stock up 3.4 percent to $84.11. Vornado continues to control 13.4 million shares of Penney’s, or 6.1 percent of those outstanding.
Roth might not be the only Penney’s board member feeling antsy either.
The Wall Street Journal’s Web site reported Tuesday that at least some Penney’s board members would consider selling the company or replacing chief executive officer Ron Johnson if “a deep drop in sales can’t be reversed this year.”
Penney’s sales fell 24.8 percent to $12.99 billion in 2012 as Johnson revamped the department store and did away with promotions, which are now making a comeback at the chain.
A spokeswoman for the retailer declined to comment, and Vornado executives as well as Ackman could not be reached.