Investors are turning up the pressure on J.C. Penney Co. Inc.
Shares of the chain dropped 12.9 percent to $17.97 Monday — the worst close since March 2009. The decline followed Penney’s 4.8 percent fall Friday, when the company revealed third-quarter losses of $123 million and a 26.1 percent same-store sales decline.
Chief executive officer Ron Johnson is trying to transform the department store into a collection of shops he describes as a specialty department store. The company’s results suggest shoppers like the new shops-in-shop, but that the branded outposts don’t represent enough of the store to offset broader weakness spurned on by the elimination of coupons and a new pricing program.
Michael Exstein, an equity analyst at Credit Suisse, downgraded his rating on the stock to underperform from neutral.
Exstein said competitors are responding to Penney’s more-focused merchandising efforts and described the firm’s third-quarter results as “a worst-case scenario.” The analyst has a target price on the stock of $15.
Late Friday, Standard & Poor’s cut the retailer’s credit rating two notches to “B-minus” from “B-plus” on the back of the weak third-quarter results.
“The downgrade reflects recent performance that has remained poor and our view [is] that it will continue to be weak over the next 12 months,” said S&P analyst David Kuntz.
The debt watchdog said the company’s business risk profile was “vulnerable” and that its financial risk was “highly leveraged.”
S&P predicted Penney’s “liquidity will remain adequate,” but noted that if the same-store sales trend continues and margins fall, Penney’s would have to turn to its credit facility to fund operations.
Deutsche Bank analyst Charles Grom said today, “We do not believe there is an immediate liquidity concern, particularly given ‘a few hundred million [dollars]’ of potential non-core asset sales remaining.”
Grom also noted that sales declines could push the company to dip into its credit facility to buy inventory or to cut capital expenditures by opening fewer shops next year than envisioned.
Penney’s said today that it would cut prices on hundreds of items for Black Friday.
“Black Friday is America’s greatest shopping tradition and we’re celebrating the occasion with our only sale of the year,” Johnson said. “All day long, customers will find some of our lowest prices ever and the chance to win amazing gifts, including once in a lifetime trips to great American destinations. It’s our way of kicking off the holiday season and saying, ‘Merry Christmas, America!’”
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)