Shares of J.C. Penney are plunging as investors have gotten scared about the company’s profit potential. The company’s CEO, Marvin Ellison tried to reassure shareholders by explaining inventory decisions to them, but it didn’t seem to have much of an effect. Is it possible J.C. Penney will be the next storied retailer to go by the wayside? Cara Lombardo reports:
Penney’s profit was also hurt by increased sales of appliances, which carry lower margins than the apparel and other goods it sells.
Penney said that despite the near-term profit shortfall, its inventory decision was right for the long term. Chief Executive Marvin Ellison said in a news release that he was encouraged by improved women’s clothing sales following the extensive liquidation, which he called a “comprehensive reset.”
Investors, though, weren’t seeing the positives. Shares of Penney, down 56% over the past year before Friday, fell 14% to $3.14 in recent trading. At its lowest point Friday, $2.76, the decline knocked off about $280 million from Penney’s market value, which is now below $1 billion.
The company’s debt also fell sharply on the news. Penney’s notes due 2020 and 2023 were both down in early Friday trading, according to MarketAxess.
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