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!’”
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews