NEW YORK — JCJCPenney Co. executives may be confident in the department-store chain's everyday pricing strategy, but investors are panicking.
The company's stock fell more than 13 percent on Monday — the biggest percentage decline by far for the day among big companies in the S&P 500 index. JCPenney stock lost nearly $3 to close at just less than $18, its lowest price since March 2009 when the United States was in a deep recession.
The company's stock fell nearly 11 percent on Monday — the biggest percentage decline among big companies in the S&P 500 for the day. JCPenney stock now is trading at about $18, its lowest price since the middle of the recession in March 2009.
The drop follows Standard & Poor's Ratings move to lower JCPenney's credit rating deeper into junk status on Friday. That came on the same day that the company reported its third-consecutive quarter of big losses and sales declines since it decided earlier this year to get rid of hundreds of coupons and sales each year in favor of predictable low prices every day.
It's the latest sign that Wall Street isn't any happier with JCPenney's pricing than Main Street is: Investors had pushed JCPenney stock up 24 percent to about $43 after the company announced the pricing plan in late January. But with Monday's drop, the company's stock has lost nearly half its value.
JCPenney, which announced its plans for the holiday shopping season on Monday, did not return calls seeking comment about its stock price. But during an investor meeting on Friday, executives assured investors that the company has enough money to continue with the strategy. And CEO Ron Johnson, the mastermind behind Apple Inc. stores who took the top job a year ago, reiterated his confidence in the plan and said returning the company to growth is "Job. No. 1."
"The CEO was selling the hope, but now investors are looking at what the company will look like in the first half of the year," said Brian Sozzi, a chief equities analyst for research firm NBG Productions who follows the company. "Investors are digesting the reality."
The reality is that customers still aren't embracing the strategy Johnson rolled out on Feb. 1. The goal of his plan was to wean customers off of the deep discounts that they'd become addicted to, but that were eroding profits.
The company said it will have its only sale of the year on the day after Thanksgiving Day known as Black Friday. But JCPenney said it will open at 6 a.m., much later than some of its rivals that are opening on Thanksgiving Day or at midnight on Black Friday. And it's using a gimmick to lure customers in: JCPenney plans to give out more than 80 million buttons to customers from Black Friday to Christmas Eve. Each button will feature a unique code on the back, which can be entered on JCPenney's website for a chance to win a vacation.