Hedge fund billionaire William Ackman has quit the board of troubled department store group JC Penney, ending three years of acrimony.

The company announced his departure yesterday less than a week after Mr Ackman had demanded the resignation of its chairman and chief executive.

The retailer has appointed Ronald Tysoe, former vice-chairman of Federated Department Stores, now Macy's, to its board and is seeking another director.

“At this time, I believe that the addition of two new directors and my stepping down from the board is the most constructive way forward for JC Penney and all other parties involved,” said Mr Ackman.

Mr Ackman's Pershing Square Capital is the retailer's largest shareholder and has been a persistent critic of the company's management. Pershing started buying shares three years ago at prices well above the $12.70 they now trade for, and has lost as much as $600 million on its investment.

Last week Mr Ackman called for chairman Thomas Engibous and interim chief executive Myron Ullman to step down. Announcing Mr Ackman's departure the company said its board had given its "overwhelming support" to the executives.

Mr Ullman (64) is a former Penney chief executive who was rehired following the departure of Ron Johnson, former head of Apple's stores, whose disastrous tenure led to a dramatic drop in sales at the stores.

Sales at JC Penney fell 25 per cent in 2012 and the company reported a $1 billion loss as Johnson got rid of the discounting for which the company is famous. Ullman was appointed on a temporary basis after Johnson’s departure and the search for his successor continues.

Mr Ackman's resignation will give Pershing Square more flexibility should it decide to begin selling its stake in the firm. The company's shares initially rose in reaction to the news but lost the gains by mid-morning. – (Guardian service)