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Industry Weighs Icahn Motive for Penney’s Stake

What are Carl Icahn's intentions for J.C. Penney?

NEW YORK — What are Carl Icahn’s intentions for J.C. Penney?

The billionaire investor has reportedly amassed a stake in Penney’s, and like jittery parents of the bride, retail experts want to know what Icahn’s intensions are for the Plano, Texas-based chain.

There has been speculation that Icahn will call for Penney’s to repurchase stock or sell off real estate. But far from pressuring management for changes, Icahn may simply view Penney’s as undervalued — the stock has fallen 42 percent in the last year to close at $48.59 on Friday — or he might like what he sees on the retailer’s horizon.

“Penney’s has good management in place,” said Walter Loeb, a retail analyst at Loeb Associates. “You could see a strong upside, probably because the stock has been undervalued and because the impending [launch] of American Living [from Polo Ralph Lauren Corp.’s Global Brand Concepts division] could be very positive for Penney’s.”

Icahn hasn’t been a fan of Penney’s aggressive expansion plans, but the retailer’s chairman and chief executive officer, Myron Ullman, last week announced that the company would curtail its plans to open 50 stores a year for the next five years by 10 stores annually. A source close to Penney’s noted that the company is still intent on opening 250 new stores, but not in the same time frame.

The retailer has other initiatives to reduce costs. Penney’s last week said it will combine marketing, merchandising and buying services for its store and direct divisions, a move that could eliminate between 100 and 200 jobs. Retail experts noted that’s a fraction of the company’s 5,000 jobs and that some of those affected could find jobs within the organization. “There are considerable savings to be had,” the source said, noting that the initiative will provide a more seamless presentation from the Web site to stores for customers.

While Icahn’s stake in Penney’s could not be learned, sources said it might be less than 5 percent since the investor has not yet reported the purchase. The SEC has a 5 percent ownership rule requiring disclosure.