Dallas, Texas 09/30/2013 (Financialstrend) – J.C. Penney Company, Inc. (NYSE:JCP) has had a torrid time past week on the browsers. It lost more than 30% of its value with a single day drop of close to 13.2% on September 27. The stock ended the rather dismal performance on the day at $9.05 which is close to 5% lower than its prior 52 week lowest valuation. More than 265 million shares of the company were traded on JCP black Friday which was more than its shares outstanding of $220 million. It was also 10 times more than its average daily trading volume.
The latest demonstration of lack of investor confidence in the stock was triggered by series of bad news coming from the ailing department store chain on Friday. In the first half of the day J.C. Penny announced that it was reducing its “year-end” cash in reserves guidance by a significant margin from $1.5 billion to $1.3 billion. Investors saw this as a sign of the store struggling to generate enough cash flow from its flagging sales to fund its future projects.
As if to confirm this view in a second announcement the firm said it is issuing 84 million new shares in a stock offering at a sticker price of $9.65 and expected to raise proceeds of close to $1 billion from the transaction. The price being quoted for the stock offering was 6.5% more than its Friday end of the day price.
This decision of the board is coming on back of immense struggle the company is going through to stem the slide and raise enough funds to move towards a revival. Due to its accumulated debt of $5.82 billion as of beginning of September the firm is not able to raise funds through the debt route. Over the past 12 months trailing period, the firm had reported a loss of $1.6 billion from sales of $12.11 billion in the same period. It sales has dropped by close to 12% over the previous quarter and the company has accumulated a debt of $5.82 billion as of beginning of September.