PLANO, Texas —J.C. Penney’s debt was downgraded to speculative grade by Fitch Ratings on concern that the retailer’s overhaul of pricing and reduction of promotions will fail to lure shoppers.
Penney’s issuer rating and $3.1 billion of unsecured debt was lowered to BB+, one step below investment grade, from BBB-, New York-based Fitch said Tuesday in a statement. Secured bank debt totaling $1.5 billion was cut to BBB- from BBB.
Penney’s steps may not draw consumers, hurting efforts by the Plano, Texas-based department store chain to boost sales, Fitch said. Chief executive Ron Johnson told analysts last month his plan to introduce a three-tier price model and scale back discount promotions to 12 per year may triple revenue.
Penney slumped 3.1 percent to $41.35 Tuesday. The shares have climbed 18 percent this year.
Standard & Poor’s, which also rates J.C. Penney at BB+, lowered the company to junk in April 2009. Bloomberg News
