Retail: J.C. Penney ousts CEO Johnson
“Ron Johnson is out as chief executive of J.C. Penney,” said Stephanie Clifford in The New York Times. The company’s board announced this week that it would replace Johnson with his predecessor, Myron E. Ullman III, after Johnson failed to turn the retail chain around during his tumultuous 17-month tenure. Johnson had previously revamped Target and created Apple’s highly successful retail stores. But his effortto eliminate discount sales and recast J.C. Penney as a collection of branded mini-stores proved deeply unpopular with customers. The company also wound up in a legal feud with rival Macy’s over the right to sell Martha Stewart housewares in its stores.
“J.C. Penney shares lost half their value during Johnson’s tenure,” said Ben Berkowitz in Reuters.com. The company’s shares soared by more than 10 percent after news of Johnson’s firing broke, but those after-hour gains evaporated just half an hour later, when the board announced that Ullman would return as interim CEO. Now the company’s board is “facing scathing criticism from investors and corporate governance experts” over the CEO swap. “With the board firing Johnson now, at this stage in the game, they should tender their own resignation as well,” said Brian McGough of the research firm Hedgeye Risk Management.
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Crime: KPMG faces insider-trading probe
Accounting firm KPMG resigned as the auditor for controversial nutrition company Herbalife and shoemaker Skechers USA this week, said Jean Eaglesham, Juliet Chung, and Hannah Karp in The Wall Street Journal. The decision came after federal investigators began probing a former KPMG employee, Scott London, over allegations that he leaked stock tips in exchange for cash and gifts. KPMG fired London last week and said it was “withdrawing its blessing” on recent financial statements of Herbalife and Skechers, but stressed that it had no reason to believe there were errors in the books of either company.
Media: Fox may go cable-only
Fox may end its 26-year run as a free broadcaster, said Edmund Lee, Andy Fixmer, and Alex Sherman in Bloomberg.com. The network’s parent company, News Corp., threatened this week to “move to a subscription model” if U.S. appeals courts don’t shut down a Barry Diller–backed start-up called Aereo, which streams local television signals to subscribers’ phones and computers. Fox and other broadcasters claim Aereo undermines their ability to collect retransmission fees. “We need to be fairly compensated for our content,” News Corp. executive Chase Carey said. “We can’t sit idly by and let an entity steal our signal.”
Markets: SeaWorld seeks IPO
SeaWorld is going public, said Arash Massoudi in the Financial Times. Its owner, Blackstone, announced the move after failing “to find an acquirer for the aquatic-themed amusement-park operator in recent months.” Blackstone bought SeaWorld, which operates 11 parks across the U.S., for $2.3 billion in late 2009. It plans to retain majority control of the company, but its Securities and Exchange Commission filing “did not reveal the quantity or price of shares to be offered.” SeaWorld said money raised from the sale would be used to pay down debt.
Jobs: Avon slashes more jobs
Wave goodbye to your Avon lady, said Andrew Khouri in the Los Angeles Times. The “struggling cosmetic firm” said it would slash more than 400 jobs “as it continues efforts to slim down amid profit plunges and other troubles.” It said it was also ceasing operations in Ireland. In recent months, the company has slashed 1,500 positions, left South Korean and Vietnamese markets, and announced plans to close distribution facilities in Atlanta and Pasadena, Calif.
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