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. Moody’s expects Penney’s gross margins will “severely decline” in the fourth quarter as the company clears excess inventory. RELATED STORY: Downgrades Send J.C. Penney Tumbling >> 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.
To celebrate Pride 2018, @themarcjacobs released the #GratefulNotHateful campaign, a social media initiative aimed at extending Pride beyond the parade. Inspired by Jacobs’ everyday outlook, the campaign features Jacobs along with a group of models and social media stars who are members and supporters of the LGBT community, all seen wearing @marcbeauty’s Highliner Gel Eye Crayons in colors of the rainbow. Head to our Instagram stories to see close-ups of the liner. #wwdbeauty
Virgil Abloh’s dad Nee and Don Crawley, cofounder of RSVP Gallery, were some of the hometown crew at the Chicago-born designer’s debut show for Louis Vuitton. (📸: @jdiderich ) #wwdmens #louisvuitton #virgilabloh
About last night: @marycharteris and @adwoaaboah hit up Hyde Park for the Serpentine Galleries’ annual summer party held in partnership with @chanelofficial. Head to WWD.com to see more photos. #wwdfashion
“This is Paris, my first show. I’m all about democracy. If some kid shows up, flew from New Jersey to just be around, let’s get him a seat.” — @virgilabloh tells WWD’s @jdiderich ahead of his first show for @louisvuitton men’s. (📸: @alfredo_piola ) #wwdmens #virgilabloh #louisvuitton
“Kate Spade was a true fashion icon who brought joy to the lives of women around the world, and inspired women to live life to the fullest. We are dedicated to carrying on her legacy,” said Anna Bakst, brand president and chief executive officer of @katespadeny. The Kate Spade Foundation announced that it will be donating $1 million to suicide prevention and mental health awareness in tribute to the recent death of Kate Spade. Read more on WWD.com. #wwdnews (📷: @chinseephoto)
A first look at @virgilabloh’s sneakers for @louisvuitton. Abloh spoke to WWD about his debut collection for Louis Vuitton, creating @kendalljenner’s #metgala outfit and redefining the heritage brand. Read the full story on WWD.com. #wwdfashion 📷: @alfredo_piola)
The world’s largest producer of denim @iskodenim is sharing the strategy behind its product development process. Read our full interview with ISKO’s product development manager Baris Ozden on the company’s extensive research practices, upcoming denim trends and the latest material innovations on WWD.com. #iskodenim