UPDATE 2-Hedge fund manager Ackman says mistakes made in JCPenney turnaround

Fri Apr 5, 2013 3:50pm EDT
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By Svea Herbst-Bayliss and Katya Wachtel

BOSTON, April 5 (Reuters) - Hedge fund manager William Ackman said that Ron Johnson, the chief executive he handpicked to turn around JC Penney, has made "big mistakes" and the impact on the struggling retailer has been "very close to a disaster."

The "criticism is deserved," Ackman said on Friday of Johnson, a former Apple executive who has come under fire for his dramatic plans to overhaul the staid retailer with cost cuts, more fashionable merchandise and a new pricing strategy.

The stock price has plummeted 27.6 percent in the first quarter as Johnson's plans alienated JC Penney's core clientele and has not resonated with new shoppers.

"One of the big mistakes was perhaps too much change too quickly without adequate testing on what the impact would be," Ackman said on Friday at an investment conference sponsored by Thomson Reuters.

After months of being a public cheerleader for Johnson, often saying that he was a doing a great job, the fund manager tempered his normally upbeat comments on Friday.

Speaking bluntly, Ackman, who sits on the JC Penney board and whose $12 billion Pershing Square Capital Management is the company's largest shareholder, said big mistakes have been made remaking the 110 year-old retail brand.   Continued...