Was Ron Right ...... and how long does Ullman have?

WWDTHURSDAY, APRIL 11, 2013 $3.00 WOMENS WEAR DAILY

LEGAL AFFAIRS SHOW OFFMENS FURNISHINGS

GET BOLD AND COLORFUL. PAGE MW1

MARTHA STEWART WINS A ROUND IN THE MACYS CASE. PAGE 6 !

CRISTIANA RUELLA REVEALS HOW DOLCE & GABBANA WAS

ALMOST BOUGHT IN THE NINETIES AND EARLY AUGHTS. PAGE 2

!

SEE PAGE 4

By DAVID MOIN

RON JOHNSONS STRATEGY for J.C. Penney, if it had worked, would have reinvented modern department store retailing.

It was audacious, iconoclastic and long-term in its at-tempt to modernize the retailers image, store design and merchandise and cut all the coupons and price promoting. But the former Penneys chief executive offi cer was ousted on Monday, leaving the company in a tailspin, struggling to recapture lost customers, and with a potential business school case study on how not to manage a public company.

Even William Ackman, whose Pershing Square Capital still owns 17.8 percent of Penneys and who had brought in Johnson, eventually turned on him. Ackman, though, on Wednesday told WWD he has no intentions of selling out. Were not going anywhere, he said.

Now others are dissecting Johnsons tenure and the autopsy isnt fl attering. Industry experts on Wednesday

continued to skewer Johnson, his management approach and hasty reinvention, and speculated on Penneys future. Still, some were surprised Johnson was ousted so soon, before results on all the new spring merchandise could be weighed.

My guess is the numbers had to have been so bad, said one retail ceo, who requested anonymity.

A few sources said some of Johnsons innovations at Penneys could survive shops-in-shop for brands like Izod, Levis and Liz Claiborne; some of the newer contem-porary merchandise like Joe Fresh, and the revamped home department with exclusive brands, refl ecting an attempt to modernize and to some extent upscale the presentation. Right now, for Myron Mike Ullman 3rd, the new ceo, its all about stabilizing the company, assessing the incoming product, raising morale and reevaluating the marketing. To a large extent, hes stuck with much of Johnsons imprint, and merchandise at least through part of fall.

2 WWD THURSDAY, APRIL 11, 2013

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THE BRIEFING BOXIN TODAYS WWD

Ron Johnsons tenure at J.C. Penney Co. Inc. wont get high praise, but William Ackman continues to support the company, which Myron Mike Ullman 3rd is working to stabilize. PAGE 1 President Obama placed a premium on international trade in the federal budget blueprint he submitted to Congress on Wednesday. PAGE 6 Sears Holdings Corp. has created Shop Your Way Brands, which will focus on developing entertainment-driven fashion and lifestyle brands. PAGE 6 Martha Stewarts company on Wednesday scored a victory in court, albeit a small one, in its trial against Macys Inc. PAGE 6 Elie Tahari will unveil its first eyewear collection for spring 2014 through a partnership with Colors in Optics Ltd. PAGE 6 Cartier has been awarded almost $30,000 in compensation by a Shanghai court in a trademark infringement case. PAGE 7 Tods Group will donate 1 percent of net profits on a yearly basis to support activities in Italys Marche region. PAGE 7 Karl Lagerfeld created a special installation for Milans Cassina showroom, mixing pieces of furniture with some of his black-and-white pictures. PAGE 8 Weary of the polemic that has raged around his loyalties and his staggering fortune, Bernard Arnault has withdrawn his application for Belgian citizenship. PAGE 8 Furnishings brands are reaping the rewards of a more-fashionable mens wear customer. PAGE MW1 Bob Arnot has returned to Passport Brands with a single mission bring back the American business of Marith + Franois Girbaud. PAGE MW3 Tommy Bahama is entering the Japanese market with two new stores, one of which includes a restaurant and bar. PAGE MW3

Gwyneth Paltrow looks Hamptons-ready in Rag & Bone. For more on the actress fashion style, see WWD.com.

TRENDSETTER OF THE WEEK: Showing off her new book, Its All Good, Gwyneth Paltrow hit the press circuit in a weather-appropriate mix of contemporary and high-end looks. For more, see WWD.com.

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By LUISA ZARGANI

MILAN The hearing Wednesday in the ongoing tax trial of Domenico Dolce and Stefano Gabbana offered a glimpse into the past, lifting a veil on dealings unrevealed until now that could have reshaped Italys fashion scene at the end of the Nineties and early Aughts.

Taking the stand for the first time and responding to pros-ecutor Gaetano Ruta, Cristiana Ruella, general director and member of the board of Dolce & Gabbana, explained the reasons behind the designers decision to sell the signature and D&G brands they owned to a sepa-rate entity, the Luxembourgbased holding company Gado Srl, in 2004. The fact that the brands were owned by the de-signers was a serious weakness, an element of risk, and the rea-sons had been made clearly evident to us by several parties and bankers, said Ruella, who spoke calmly and unfaltering-ly throughout her deposition, wearing a white shirt, a black sweater and black pants, with a black-and-white printed foulard.

In a period Ruella identi-fied as between the end of the Nineties and 2001-2002, there were three different negotia-tions on the table, she said. The first one was with L Capital, the investment fund controlled by LVMH Mot Hennessy Louis Vuitton. [L Capital chairman] Daniel Piette contacted us through J.P. Morgan, as L Capital intended to enter [Dolce & Gabbana] with a minority stake. But it was made clear to us that the deal could have taken place only if the brands belonged to the company, said Ruella. She then named Vincenzo Maranghi, the late head of Mediobanca, who she said spearheaded the acquisition of Valentino in 1998 (with Maurizio Romiti) through the now-defunct HdP, or Holding di Partecipazioni Industriali. In addition to Dolce & Gabbana, the plan was to also buy Versace, shortly after the death of Gianni Versace in 1997, to create an Italian luxury pole [under HdP] to juxtapose to the French. In this case, too, a must to move forward was for the brands to be within the group.