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Ullman has been working to stabilize the business by bringing back basic merchandise and more frequent sales eliminated by Johnson in a bid to attract younger, hipper customers. But many analysts believe that while traffic is improving, there has been no evidence of a turnaround yet as the company heads into the bulk of the critical back-to-school shopping period. Even the home area, which was Johnson's project and features a slew of trendy new names like Jonathan Adler and Michael Graves, has failed to resonate with shoppers, analysts say. Penney was counting on the new home area, launched this spring, to reinvigorate customer traffic. Moreover, concerns are growing about Penney's financial liquidity. Analysts had expected Ullman's reign the second time around would be transitional until Penney hired a replacement. The public battle between Ackman and the board chairman has had spectators from all sides weighing in, including Howard Schultz, Starbucks founder and CEO. During a phone interview with The Associated Press late Thursday, Schultz defended Ullman, who serves as a member of Starbucks board, and lambasted Ackman. He said he had never seen anything like a scenario where a board member leaks a critical letter without first speaking to the CEO in question. He said he found it "perverse" that Ackman was pushing for new management when he was the one who pushed the board to hire Johnson, with disastrous consequences. "Mike has been working tirelessly to save the company," Schultz said. In the letter released Friday, Ackman acknowledged that making his letter
public Thursday was "an extraordinary step." "In my history as a board member of many public companies over the last 15 years, I have never before released a public letter to a board of which I was a current member," he wrote. But he said he used it as "the last resort" after trying to negotiate a resolution of his concerns about the recruitment process. Citi Investment Research analyst Deborah Weinswig reiterated in a note published Friday that she believes J.C. Penney needs a "dream team" in order to turn its fortunes around and she says "time is of the essence." Weinswig, once a cheerleader of the company, downgraded the stock to "Sell" from "Neutral" last week. Plano, Texas-based Penney is scheduled to report second-quarter results scheduled to be released Aug. 20. Shares fell 79 cents, or 5.8 percent, to $12.87, giving back most of the gains they made Thursday upon the first disclosure of Ackman's letter. Earlier in the day they touched a 52-week low of $12.34.
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