JC Penney set to raise new equity to shore up its finances
As the holiday season draws near, JC Penney Co Inc is now seeking to raise between USD750 million and USD1 billion in new equity in order to strengthen its cash reserves. This move was confirmed by three individuals with knowledge of the matter.
The share performance of the retail giant, which dropped nearly half its value this year, has a current market value of USD2.6 billion. The decision is to lean towards the issuance of new shares although other means of raising capital are also being considered.
The company, when inquired, declined to make any comment on the matter.
The sales of the company had declined by 25% after it eliminated coupons and removed merchandise that had long been popular with its clientele but was not in line with then CEO Ron Johnson's grand plan to offer trendier items. Despite returning to its old pricing strategy, sales still continued to fall.
Just last month, JC Penney said it projected to have USD1.5 billion in cash by the end of the current fiscal year ending February 1. This provides the retailer enough time to restock its inventory. This is in addition to the Goldman Sachs arranged USD2.25 billion loan.