George Soros apparently sees opportunity at the ailing J.C. Penney Co. Inc.
Soros Fund Management bought 17.4 million shares of Penney’s, giving the prominent liberal philanthropist and investor a 7.9 percent stake, according to a filing with the Securities and Exchange Commission.
Soros, who famously rocked the Bank of England by shorting the pound in 1992, was greeted heartily by other Penney’s investors. Shares of the company shot up 7.2 percent to $16.33 in after-hours trading. At that price, Soros’ stake is worth $283.9 million.
“[The investment] shows his confidence in the company,” said Walter Loeb, retail consultant. “It also shows that he thinks the return to a more promotional attitude will generate enough sales to return the company to profitability.”
Penney’s lost nearly $1 billion last year and 25 percent of its sales as former chief executive officer Ron Johnson tried to eliminate coupons and remake the store into a series of shops-in-shop.
Price promotions are now making a return and veteran Myron “Mike” Ullman 3rd is again at the helm as ceo, working to calm vendors and deciding how to proceed with the shop-in-shop strategy. The company is said to have burnt through $1 billion in the first quarter and has engaged a number of consultants to help it raise funds beyond the $850 million recently drawn from its credit facility.
Penney’s stock fell by 50 percent during Johnson’s tenure and is having to regroup just as retail shares roar to new highs — a dichotomy that sets up the company as a potentially attractive investment, if it can reconnect with consumers.
On Thursday, the S&P 500 Retailing Industry Group gained 1.4 percent, or 10.20 points, to 755.55, setting a new record of 758.73 in midday trading. Retail was bullish versus the broader market. The Dow Jones Industrial Average ended up 0.2 percent, or 24.50 points, to 14,700.80. Low interest rates have helped push the stock market to new heights even as the recovery has remained shaky.
Soros is Penney’s fifth-largest institutional investor. Activist investor William Ackman’s Pershing Square Capital is the company’s largest investor, with a 17.8 percent stake. Ackman, who agitated for change at the retailer and helped bring in Johnson, has said he’s sticking by his investment. Rounding out the top five Penney’s investors are ID Management, Dodge & Cox and State Street Corp.
Soros Fund Management has investments in 212 companies, with a total market value of $5.67 billion. That includes 1.3 million shares of Wal-Mart Stores Inc., worth $98.3 million, and 1.1 million shares of Macy’s Inc., valued at $48.4 million.
Soros has dabbled elsewhere in fashion, for instance, repeatedly pumping money into e-commerce company Bluefly Inc. And last year, his Crystal Financial fund extended American Apparel Inc. $80 million in financing, allowing the racy U.S. producer to retire other debt.
The investor’s reach is long on Wall Street and several retail analysts declined to comment on the investment, citing Soros as a client. A spokesman for Soros also declined to comment, as did a spokeswoman for Penney’s.
From overseeing America’s fastest-growing speciality retailers to codifying cool, WWD talked to the women who are leading the way for the future of beauty. Check out our Instagram Stories to see how these women built today and are creating tomorrow. (📸: @hannah_khymych) #wwdbeauty
For @laperlalingerie's spring 2018 show, the brand chose to host their event at @thevenetianmacao. With Chinese megastars @bingbing_fan and @hubing in attendance, La Perla debuted a rock ‘n’ roll-inspired collection. The show marked the start of Sands Macao Fashion Week, which runs from October 19 to 24 — the city’s first such event. Pictured here are models backstage with glimmering eyes. #wwdfashion (📷: Cheuk-Yin To)
Trending for spring 2018: top stitch design. Gone are the days of stitch just for seams — designers are using the once-minimal detail to create strong decorative elements. (📷: Paola Testa; Styled by @andrew_shang) #wwdfashion
@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)