The J.C. Penney Co. Inc. onslaught continued Tuesday, but activist investor and board member William Ackman stepped in to defend the company’s strategy.

Fitch Ratings cut the retailer’s credit rating two notches to “B” from “BB-minus.” The outlook on the rating is negative.

Penney’s has weathered a series of credit and equity downgrades since the company said same-stores sales fell 26.1 percent in the third quarter.

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Ron Johnson, chief executive officer, began putting his mark on the chain this year, eliminating coupons, switching up the pricing regimen and adding branded specialty shops. 

“The jury remains out on whether J.C. Penney has done some irrevocable damage or whether it can begin to turn around faltering sales and sustainably improve the profitability of its business beginning the first quarter of 2013,” Fitch said.

The rating agency said sales could continue to fall by a percentage in the low-single digits next year.

Ackman, who played a key role in bringing in Johnson to lead the company, remains an ardent supporter of the ceo. That’s an important vote of confidence since Ackman controls 25.2 percent of the company’s stock.

“Ron has gone to launch the fastest growing specialty retailer of all time, which is what we call ‘New JCP,’” Ackman said on CNBC’s “Squawk Box.”

Since Aug. 1, the space devoted to the new branded shops in Penney’s has grown from zero to 7 million square feet, said Ackman. Those shops draw sales of $270 a square foot, or twice the average for the rest of the store. The idea is to have the store become a collection of 100 such shops after three more years.
“The problem that people have is it’s very hard for people to look at this company on a consolidated basis,” Ackman said. “On a consolidated basis, it looks terrible.”

The investor said Johnson was “winding down the old JCP and using the cash flow from the old JCP to fund the growth of this [new] business.”

Penney’s as a chain and an investment for Ackman is still very much a work in progress. The investor bought into the retailer at slightly over $25 a share in 2010. The stock closed down 3.2 percent to $17.40 Tuesday. The stock has lost 26.1 percent of its value over the past week.