Moody’s Investors Service sharply cut its credit rating on J.C. Penney Co. Inc. Tuesday.
The debt watchdog downgraded the retailer’s corporate family credit rating three notches to “B3” from “Ba3.” The new rating is described as “subject to high credit risk” under Moody’s scale. The outlook is negative.
The other major credit rating agencies, Standard & Poor’s and Fitch Ratings, each cut Penney’s rating by two notches earlier this month. Lower credit ratings could make it more expensive for the company to borrow money but do not have an immediate operational impact on the retailer.
Analysts have grown worried that Penney’s will have to dip into its credit facility to pay for chief executive officer Ron Johnson’s reinvention of the firm. Johnson is remaking what was a highly promotional department store into a specialty department store with branded shops and a different pricing model.
Moody’s expected comparable-store sales declines at Penney’s to improve modestly in the third quarter, but they worsened instead, falling 26.1 percent versus the 21.7 percent decline in the second quarter. The rating agency, however, noted that the company does not have debt coming due soon and also has “unencumbered assets” that give it financial leeway.
The weakness at the company and its race against time to remake its stores has gotten the rumor mill churning.
Shares of Penney’s gained 2.9 percent to $17.24 Tuesday as traders whispered about the possibility of a leveraged buyout of the firm.
One financial source said nothing appeared to be in the works but that a buyout down the line was possible.
“All the initiatives that J.C. Penney is trying are the kind of stuff that private companies do better than public companies,” the source said. “I’d have to believe that it’s somebody’s Plan B or C.”
Activist investor and Penney’s board member William Ackman controls 25.2 percent of the company’s stock and helped install Johnson in the corner office.
Spokeswomen at Penney’s and Ackman’s Pershing Square Capital Management said their companies do not comment on market rumors.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast