J.C. Penney shares tumble after CEO warns of weak sales ahead
Thursday, 20 September 2012
Department store chain J.C. Penney Co.(NYSE:JCP) saw its shares plunge over 10 per cent Thursday, a day after its CEO Ron Johnson warned of weak sales in the second half of the company’s fiscal 2012 year.
Johnson spoke to investors on Wednesday about how the retailer has made an effort to rebrand itself, including changes to its pricing, merchandise and store design.
The retailer in February introduced a new pricing strategy that saw the elimination of sales events in favour of everyday pricing and also remodelled stores to become a more fashion-oriented chain.
These actions, to create a leaner and more simplified operating structure, were expected to achieve annual savings of $900 million by year-end.
But last month, the company reported that it swung to a second-quarter loss amid severe declines in online and same-store sales, marking another quarter of heavy revenue declines since changing its pricing strategy.
Johnson said in the presentation yesterday that it still sees some difficulty ahead, but expects business to improve in the long run.
The company also unveiled a new store prototype at an investor meeting Wednesday.
J.C. Penney was downgraded by Zacks Investment Research from a “neutral” rating to an “underperform” rating in a reported released yesterday. The firm currently has a $26.00 target price on the stock.
Shares tumbled more than 10 per cent to $26.14 this afternoon.