And the hits just keep on coming for J.C. Penney (JCP) . Shares in the retailer plunged as much as 15 percent today, taking them to a 13-year low, after news that Goldman Sachs (GS) had initiated coverage on Penney’s new bond offerings at “underperform.”
Concern amid new round of bond-selling
Goldman Sachs doesn’t see a bright future for the retailer, citing serious concerns about the company even as they’re trying to improve liquidity yet again. In writing about the new bond sale, including 7.95 percent unsecured notes due in 2017, 5.65 percent notes due in 2020, and 6.375 percent notes due in 2036, Goldman Sachs said "We expect 3Q and 4Q to be difficult, with comp store sales likely showing a slower-than-expected improvement." They also said expectations for a difficult business environment across the retail industry is "increasing the risk of a poor holiday season that the company can ill afford."
It’s a sentiment echoed by many in the industry. "Whether it is related to increased online shopping or the shakiness in consumer confidence, the expectation that there will be fewer people in the stores could prompt some retailers to reduce the number of extra people they will need on the sales floor," said John A. Challenger, CEO of executive placement firm Challenger, Gray & Christmas in a press release.
J.C. Penney headed to penny stocks territory?
The company continued a massive slide in the wake of the very public failure of former CEO Ron Johnson, who gained recognition for helping Apple (AAPL) build its signature Apple Stores. Johnson’s experiment with ending coupons and several discount brands in an effort to attract more discerning customers didn’t seem to line-up with J.C. Penney’s traditionally price-conscious customer base, and prompted slumping revenues. Shares in the company are down over 75 percent since February of last year, two months before Johnson’s ouster.
Holiday hirings announced
The massive retailer also announced a new round of holiday hirings on Wednesday. Many retailers are scaling back staffing after last year’s reached levels that represented a 12-year high. J.C. Penney announced plans to bring on some 35,000 temporary workers, similar to its 2011 levels.