Shares of J.C. Penney Co. Inc. have fallen below the price threshold required to stay on the New York Stock Exchange, another sign of trouble at the $12 billion chain.
The retailer’s average share price over the past month has been 90 cents, according to S&P Capital IQ, putting the stock in jeopardy of being delisted. The clock is now ticking for Penney’s to pull up its average closing share price over a 30-day period to above $1 to remain listed on the NYSE. The stock closed at just 69 cents Thursday despite a 9.1 percent gain for the day.
NYSE’s rules give companies either a six-month window to get back in line, or until the next annual stockholder meeting if they decide to proceed with a reverse stock split, an option the retailer said Thursday it is considering. A reverse stock split would effectively divide its outstanding shares to increase share price while keeping its market capitalization steady. To do that, the company would need stockholder approval during their next annual meeting.
J.C. Penney said it will inform the NYSE within 10 days of its plan to address the problem. The company said it is meeting all other NYSE listing requirements.
“The NYSE notification does not affect the company’s business operations or its Securities and Exchange Commission reporting requirements, and it does not conflict with or cause an event of default under any of the company’s material debt or other agreements,” the retailer said.
Penney’s has never fully recovered from the devastating tenure of Ron Johnson, who, from November 2011 to April 2013, attempted to modernize the business but alienated customers, losing about one third of the company’s volume and running up enormous costs in the process.
Johnson was replaced by Myron Ullman III, who, returning to the company for a second stint as ceo, managed to stop the bleeding. He turned over the reins to Marvin Ellison, who in hindsight orchestrated some merchandise maneuvers that flopped, such as adding major appliances and a big and tall subscription service, both of which were discontinued. He also failed to focus enough on filling voids in soft goods.
Jill Soltau is the current ceo. She has successfully attracted top talent from such retailers as Target, Macy’s and Walmart, including Michelle Wlazlo, executive vice president and chief merchant and Trish Adams, strategic adviser. She’s also pulled the reins on inventories, and has her team reviewing the merchandising, pricing, promotions and marketing, with a renewed focus on fashion. But there’s $4.1 billion of debt that needs to be restructured and there’s not enough money to support the kind of capital improvements the company needs with stores, technology and other areas. The brand name and private labels still resonate with much of middle America, but vast changes are needed before the company regains fully its relevance, if that’s possible at all.
“Together, we will continue to strengthen our operational capabilities, optimize our product selection, and create a compelling and rewarding shopping experience for our customers,” Soltau said recently.
For the $12 billion chain, Soltau has described women’s apparel and soft home goods as “legacy strengths” crucial to the recovery, and she’s suggested new brands and merchandise initiatives could be in pipeline.