Boston, MA 10/04/2013 (wallstreetpr) – That J.C. Penney Company, Inc. (NYSE:JCP) is not in proper health is no longer a rumor. A confirmation to this effect has been issued by rating agency Fitch in their latest report. The agency has issued CCC junk rating on the stock, a downgrade from the previous B-.
The reason for the latest downgrading of the stock according to Fitch is the unanticipated spending in cash by the company high above what was expected. The rating agency now expects expected JCP to have cash spending in the region of $2.8 – $3 billion by end of 2013. This, according to Fitch, is $1 billion off the May forecast.
The fact that JCP has been seeking to raise at least 96.6 million cash in share offer further complicates the picture of the retailer’s financial condition. This comes even after the retailer allegedly wrote off need to raise any addition cash before end of 2013.
In April, JCP reinstated Myron E. (Mike) Ullman as the CEO after a nearly 17-month stint at the helm by Ron Johnson whose ideas never brought the desired change. The retailer chain which operates more than 1000 stores in at least 49 states needed (and still needs) serious transformation ideas to bring it back on course. Investors are already jittery over the stock, and this is not without reason.
The latest downgrade report by Fitch is just on among several pointers to the company’s gloom. It is reported that the company has been in the reds for a very long time now. On a year-to-date basis, the stock is said to have slipped in valuation by more than 55%.
Recently, Goldman Sachs assigned the stock an “underperform” rating. Goldman pointed its reason for this rating as poor fundamentals in the company. JCP inability to rival its competitors is causing investor hemorrhage.
The company currently has $2.56 billion in market value and $27.00 one year high against $8.38 low.
