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Standard & Poor's director of corporate ratings David Kuntz on cutting JCPenney's rating for the second time in two months.
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That's -- theory.
Can JC Penney get it together standard poor's downgrading the retailer's corporate credit rating -- B plus some weak earnings and future performance concerns.
-- you know we knew that new retail strategy would take some time to implement but will investors be patient and will it even work.
David -- as director of corporate ratings at Standard and -- any joins us now.
I mean -- plus it is just four levels into junk to junk territory what do you think I mean how much worse could -- Well we we we thought that the company would be able to.
How -- operational issues.
Over the near term and so really that's one of the of the reasons behind the action we took yesterday.
Yet I mean -- You cut the rating for the second time in two months.
In the meantime shares of declined 53%.
Since hitting it hitting a 52 week high.
In February.
You're looking at the turnaround story and you know we all know it's gonna take some time to implement but how much more time.
Would you give that would you say it's working at all.
Sure I think you know it's it's a little too early to tell they've had about one quarter of of operations under the new strategy.
And admittedly -- it was very weak.
We -- we're looking for a turn around some -- -- later this year at the end of 2012 for an early 2013.
We'll be meaningful to you what would you like to see -- your what what are some of the month.
That marks that you're looking for them to hit in -- start feeling better about the stock.
Certainly.
We would like to see and in increasing customer traffic that has been that was down sharply in the first quarter.
We like to see some of the merchandise efforts connect with the consumer and so they're operating margins begin to recover.
And we'd like to see.
That would result in ebitda growth and so -- eleven -- would start to come down a little bit.
Is promising anything they're doing right in your eyes.
You know I think they're doing many things right arm it's really just like little -- -- Like I think the idea of thumb going more to branded merchandise with the consumer.
Will eventually have some effect it's really just getting the the marketing message.
Connecting that with the consumer so they're able to drive the traffic.
You know one thing that existing you mentioned the marketing message and there's been a lot of talk about JC Penney in terms of trying to attract -- -- customer.
-- hired Ellen DeGeneres who's openly gay.
To be their spokesperson.
And a lot of the data you know says -- -- that you know as many as sixteen million gay customers out there to be capitalized of time.
That in general they've doubled the disposable income.
Out of the average American and you know this is to -- according to some research that we were looking at do you think that's a good strategy abroad is that if you feel better about the stock.
Tom you know I think that the company is trying to be more inclusive and reach out to.
A lot of different aspects of of the consumers.
What we're seeing now with a lot of different retailers take that approach so.
I don't think it's really just JC -- that's that's definitely take an approach and mentally they've they've been in the news for for some of those marketing tactic do you -- That they risk alienating people or is Alan does have such a big following.
But that's a plus no matter what.
We really when when comment about that.
OK -- data comes thanks for coming -- we appreciate it.
