Are J.C. Penney’s Vendors Losing Faith?
J.C. Penney (NYSE:JCP), a more than 100-year-old chain, has problems on two fronts: The retailer has lost the confidence of both the market and its vendors.
Last week, shares of the department store chain’s stock hit a 13-year low, a plunge precipitated by two warnings. Analysts predicted that sales did not pick up during the important back-to-school shopping season at the end of August and the beginning of September, and a research by Goldman Sachs indicated that J.C. Penney needs to raise more cash, and soon.
The report of worse-than-expected sales results and the company’s need for more financing run contrary to the nascent turnaround narrative that investors had started to believe after second-quarter results were released August 20. Even though revenue dipped for the ninth consecutive quarter and the company’s quarterly loss widened, its same-stores sales decline slowed in the second quarter, dropping just 11.9 percent compared to the first quarter’s 16.6 percent decrease. That metric also improved each month during the second quarter, a pattern J.C. Penney said it expected to continue into the current quarter.