PLANO, Texas (AP) — J.C. Penney, which has faced concerns it is burning through cash, still anticipates having ample liquidity at year's end.
The struggling department store operator also said a key revenue figure fell 4 percent in fiscal September from a year ago, but that its online sales continue to strengthen. Its shares rose more than 6 percent in premarket trading.
The retailer is trying to recover from a failed turnaround attempt spearheaded by former CEO Ron Johnson. Two weeks ago the Plano, Texas, company said it planned to sell up to 96.6 million shares of common stock in a public offering, evidence the chain is looking to shore up its cash reserves.
J.C. Penney's board ousted Johnson in April after 17 months on the job and rehired the previous CEO, Mike Ullman. Under Ullman, J.C. Penney is bringing back sales events that had been ditched and is restoring basic merchandise eliminated by Johnson.
Ullman said Tuesday that the chain is in the early stages of its turnaround.
J.C. Penney Co. anticipates more than $2 billion in year-end liquidity — a measure of its ready access to cash — after closing on a public stock offering of 84 million shares. The company said that the offering resulted in about $785 million in net proceeds. It also said Tuesday that it remains current in vendor payments.
The retailer said that September revenue at stores open at least a year, while down from a year ago, rose when compared with August, with sales of women's clothing increasing.
Revenue at stores open at least a year is a key gauge of a retailer's health because it excludes the potentially distorting effect of results from stores recently opened or closed.
Online revenue increased 25.3 percent in September, building on a 10.8 percent gain in August. For the third quarter-to-date, online sales are up 18.6 percent.
J.C. Penney said that at both its stores and online purchase conversions climbed in September from the prior-year period mostly because of better inventory levels in key items and having the sizes its shoppers want.
While traffic improved at its stores not located in malls during September's last two weeks, J.C. Penney said that its mall stores are still contending with weak traffic levels.
J.C. Penney said it is still working to fix its home store concept, and has reopened "all but a handful" of its 505 new home departments. The retailer admitted that the product mix, shopping environment and prices didn't resonate with customers and that sales are still weak at its stores. J.C. Penney said that it is also working to come up with a more balanced mix of modern and traditional home furnishings at better price points and making the shopping layout easier for shoppers.
Also on Tuesday, Sterne Agee analyst Charles Grom downgraded J.C. Penney's rating to "Hold" from "Buy" and cut its price target in half, to $9 from $18. Groms said in a client note that he fears former CEO Johnson may have permanently turned off the retailer's core customer.
Ullman said Tuesday that reconnecting with customers and getting them into stores is a top priority for the chain.
"We are all dedicated to continuing the momentum underway and restoring J.C. Penney to a leadership position in American retail. It will take time, but we are on the right path with a sound strategy and achievable goals," he said.
Share rose 52 cents, or 6.7 percent, to $8.23 in premarket trading about 45 minutes ahead of the market opening.