Penney pleased with turnaround, sees sales rising


NEW YORK (AP) — J.C. Penney’s reassurance that its transformation is on track seems to be calming investors — for now.

The beleaguered department store chain, which had seen its shares in a free fall in recent days, on Thursday sought to appease investors who were worried about the company’s cash liquidity and sales following a gloomy analyst report on the company.

The department store chain released a statement on Thursday that it was pleased with its turnaround efforts. CNBC also quoted Penney’s CEO Mike Ullman as saying that he doesn’t see conditions this year where “we’d need to raise liquidity.”

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The statements came after Penney shares fell near 13-year lows on Wednesday to close at $10.12. Shares surged nearly 11 percent to $11.21 late morning on Thursday. Overall, shares have lost about 75 percent of their value since early February 2012.

Wednesday’s free fall came a day after a gloomy analysis by Goldman Sachs, which began coverage of Penney’s unsecured debt with an “Underperform” rating. In the report, Goldman Sachs analyst Kristen McDuffy wrote that she fears that the company will be forced to tap into the debt markets for more cash. McDuffy also said that she believes that the current and fourth quarter will be difficult, with business likely showing a slower-than-expected improvement.

Reports have been swirling since late last week that Penney is looking to raise more money, possibly through a combination of debt and equity. J.C. Penney’s reported search for more capital comes after it arranged a $2.25 billion loan this past spring with Goldman Sachs.

In the statement released Thursday, the Plano-based department store reiterated that it expects to see revenue at stores open at least a year rise toward the end of the third quarter and throughout the fourth quarter. The figure is considered an indicator of a retailer’s health.

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Penney said that it’s seeing increased buying online and in its stores mostly because it has key items back in stock and sizes that shoppers are looking for. It also cited greater predictability in its performance across many areas.

Penney is trying to recover from a botched transformation plan spearheaded by former CEO Ron Johnson that led to disastrous financial results. The board ousted Johnson in April after 17 months on the job and rehired Ullman, who had been CEO of the retailer from 2004 to late 2011. Under Ullman, Penney is bringing back sales events that had been ditched and restoring basic merchandise like khakis that were eliminated by Johnson.