Shares of J.C. Penney Co. Inc. dipped 0.02 percent to close at $14.58 Thursday even after the retailer denied there was any problem with the factoring arm of CIT.
The stock had rebounded in early-morning trading on the New York Stock Exchange following the denial, climbing 3.2 percent to $15.07 and hitting an intraday high of $15.53. More than 27.5 million shares changed hands, compared with a three-month average volume of 9.3 million.
Penney’s said it was told directly by CIT that reports that the factoring firm had stopped approving orders were untrue. It added that CIT-factored merchandise is less than 4 percent of the retailer’s overall inventory for the year. Penney’s also said that it expects to close the quarter with $1.5 billion in cash on its balance sheet.
Credit sources told WWD that CIT had not stopped approving orders, and that in some cases it had asked its clients for more information about the orders before making any final decision on whether to go ahead with any approvals.
Credit sources on Thursday confirmed that the second-quarter earnings report, expected Aug. 20, will provide more details regarding Penney’s financial condition. They don’t expect any change in factoring decisions until after that report is issued.
In addition, credit analysts said that the $1.5 billion referred to by Penney’s as its cash-on-hand expectations at the end of the quarter is not really meaningful until the quarterly financial report, when investors will find out the exact current availability under the retailer’s credit facility and the revolver’s terms.
Penney’s denial didn’t allay all concerns.
Paul Trussell, retail analyst at Deutsche Bank, is forecasting a cash burn of $1 billion in the second quarter. He’s also forecasting a second-quarter same-store-sales decline of 9 percent and a loss of $1.10 a share for the period. He noted that the “slow-paced turnaround is leading to a high rate of cash burn.”
Matthew Boss, retail analyst at J.P. Morgan, is forecasting a slightly higher cash burn rate of $1.2 billion for the second quarter. He said that the availability of cash under the revolver is “adequate to cover the seasonal build and for Penney’s to post additional letters of credit for vendors” if needed. The analyst concluded that it would take another year of weak results, $1 billion in capital expenditures and working capital usage before Penney’s would run out of cash and availability in late 2014.
@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