As rivals stage a steady rebound from the weakness of the last few years, the Plano, Texas–based department-store chain J.C. Penney Co. Inc., has deteriorating financials, is struggling to identify its core customer and is still searching for a new chief executive, all issues that analysts say that could push it into bankruptcy if it can’t turn things around quickly, MarketWatch.com reported. Penney’s second-quarter earnings report last week delivered the latest in a string of disappointing numbers, sending shares down almost 27 percent in their biggest one-day tumble in J.C. Penney’s 40-year history as a public company. The results and lowered guidance prompted S&P Global Ratings to downgrade the company’s credit rating to B- from B, sending it deeper into speculative-grade, or “junk,” territory. The downgrade reflects “continued weak operating results, compounded by persistently ineffective inventory management that has been a primary contributor to margin pressure and, in our view, indicates increasing execution risk,” said S&P. J.C. Penney has failed to zero in on its customer base over the past few years, Chief Financial Officer Jeffrey Davis conceded on the company’s recent earnings call, and the business is hurting because of it. In its most recent quarter, the company had to discount slow-moving and excess seasonal inventory to prepare for the back-to-school season. J.C. Penney expects to reduce its enterprise inventory by at least $250 million by the end of fiscal 2019.
