J.C. Penney Co. Inc.'s long-term and short-term credit rating was cut to junk status yesterday by Moody's Investors Service, which also gave a bleak outlook for the retailer's future.
Moody's lowered its rating based on the decline in credit fundamentals because of the poor operating performance at Penney's department stores and its Eckerd drugstore chain. It added that a competitive environment and general economic weakness increase the challenge of turning the business around.
The downgrade will make it more costly for J.C. Penney, Plano, TX, to borrow and could make suppliers more leery of doing business with the retailer. Penney, faced with a second losing quarter, closed 45 stores last year and said it would close 47 stores and catalog centers this year. Penney already has cut about 5,500 jobs.