The Associated Press
The Associated Press
NEW YORK — J.C. Penney Co. executives may be confident in the department-store chain’s everyday low pricing strategy, but its investors are panicking.
The company’s stock fell more than 13 percent on Monday — the biggest percentage decline by far for the day among big companies in the S&P 500 index. Penney stock lost nearly $3 to close at just under $18, its lowest price since March 2009 when the United States was in a deep recession.
The drop follows Standard & Poor’s move to lower Penney’s credit rating deeper into junk status on Friday. And that came on the same day that the company reported its third consecutive quarter of big losses and sales declines since it decided earlier this year to get rid of hundreds of coupons and sales annually in favor of predictable low prices every day.
It’s the latest sign that Wall Street isn’t any happier with Penney’s pricing than Main Street is. Investors had pushed Penney stock up 24 percent to about $43 after the company announced the pricing plan in late January. But customers haven’t warmed to Penney’s pricing, and investors have grown cold on the stock. With Monday’s drop, Penney’s stock has lost nearly half of its value this year.
Penney, which announced its plans for the holiday shopping season on Monday, did not immediately respond to requests seeking comment about its stock price. But in a meeting on Friday with investors, executives assured them that the company has enough money to continue with the strategy.
CEO Ron Johnson, the mastermind behind Apple Inc. stores who took the top job at Penney a year ago, also reiterated his confidence in the plan and said returning the company to growth is “Job. No. 1.” Additionally, he touted the early success of the makeover Penney began this fall of 700 of its 1,100 stores with 10 sectioned-off shops inside each that feature different brands such as Levi’s and Penney’s new JCP line of casual clothes.
“The CEO was selling the hope, but now investors are looking at what the company will look like in the first half of the year,” said Brian Sozzi, a chief equities analyst for research firm NBG Productions who follows the company. “Investors are digesting the reality.”
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