J.C. Penney attempted to assure its investors on Thursday that the company is not facing a credit squeeze, however two analysts have recommended that their clients sell the stock.
Shares of the company’s stock were up during premarket trading, following reports the company disputed that sparked a sell-off of 10% on Wednesday.
However, the earlier gains were given back following the two downgrades by analysts.
If that move were true, it could potentially cause the retailer to cut the products it has to sell or pay in cash to its suppliers.
However, on Thursday, Penney’s statement said it was told directly by the commercial lender that Wednesday’s reports had been false.
Penney said all its key vendors have continued with their shipments and that the merchandise supported by the loans currently amounts to lower than 4% of its inventory overall for this year.
In addition, the company said it had ample liquidity to take care of its business and expected to end the quarter with cash of $1.5 billion up from the $821 billion it had at last quarter’s end.
A Citigroup retail analyst, Deborah Weinswig wrote in the downgrade she released that she does not think Penney has made progress in stabilizing its business during the second quarter.
The retailer has suffered through a great deal of the last three years after hiring a new CEO who changed the interior design and layout of the stores and ended the specials the stores offered, by reducing the prices to everyday low prices. That succeeded in many customers going to other retailers.
