Sep. 25 - Struggling retailer J.C. Penney could seek to raise up to $1 billion to build up reserves before the holiday season, say sources. But the company says it is pleased with turnaround efforts. Fred Katayama reports.
J.C. Penney seeks to build up its cash cushion before the busy holiday season. Sources tell Reuters the struggling retailer is leaning toward selling new stock of up to $1 billion but is considering other ways of raising money. It was just last month that Penney had said it would have $1.5 billion of cash at year-end, enough to keep its shelves full. But Wall Street is flashing the warning signs. Citigroup slashed its price target to $7 from $11. J.C. Penney's stock, which fell to its lowest level in nearly 13 years on Wednesday, is trading at roughly a tenth of its peak in 2007. Penney said in a statement: "It is pleased with its progress thus far in the company's turnaround efforts." It still anticipates positive same store sales in the third and fourth quarters. But an analyst at the very bank that had helped Penney raise more than $2 billion this year, Goldman Sachs, has said she expects the chain's sales to improve more slowly than expected. And she raised questions about its liquidity partly because of the poor sales of its home goods like sheets and clocks. That was the very focus of former CEO Ron Johnson's botched costly overhaul that brought in designer brands like Martha Stewart and Michael Graves. Citi says the retailer has a liquidation value of $1 a share. That would really make it a 100 penny stock.