J.C. Penney's Credit Worthiness Downgraded

Fitch not confident in new pricing plan or restoring sales

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    NEWSLETTERS

    TK
    AP
    J.C. Penney implemented their new "fair and square" pricing plan this month to mixed reviews from analysts.

    Plano-based retail giant J.C. Penney may be in credit trouble.

    Fitch Ratings downgraded Penney to junk territory with a BB+ credit rating. Penny had been rated BBB-, the lowest level on the investment-grade scale. 

    Fitch worries the company won't be able to get customers to buy into their new pricing structure while simultaneously improving sagging sales that, along with restructuring costs and management changes, resulted in a 3Q loss of $143 million.

    Penney's new "fair and square" pricing plan calls for an end to sales with every day pricing being the best price offered.

    Company executives, including new CEO Ron Johnson, are confident about the change and expect positive earnings next year.

    Penney is expected to report fourth-quarter earnings on Friday.