J.C. Penney Seeks to Recover through Credit

J.C. Penney’s recent financial struggles have caused market shares to drop. Throughout 2012, sales for J.C. Penney dropped approximately 31 percent throughout the United States in their stores, and online sales weren’t any better. Despite revamped marketing campaigns, the clothing brand has been unable to stop the loss of sales and revenue. In fact, J.C. Penney even bought 6 prime-time commercial slots during this year’s broadcast of the Academy Awards. They’ve recently announced that they have drawn on $850 million from their revolving credit as part of their efforts to rebrand themselves.

$850 Million in Money Management

The $850 million that J.C. Penney has drawn comes from its $1.85 billion in revolving credit. This is the latest sign that the clothing brand is continuing to struggle and hasn’t been able to turnaround financially as planned. Top executives including Chief Financial Officer Ken Hannah made the credit decision. The $850 million credit ensures continued liquidity, and proper money management might help J.C. Penney avoid bankruptcy – or worse.

This development comes after CEO Ron Johnson approaches a year and a half at the helm of the company. Their strategy to improve money management and credit includes closing floundering stores and incorporating strategic sales to drive buyers. The recent financial struggles have resulted in nearly a billion dollars lost in 2012 alone. Whether or not this $850 million credit will help J.C. Penney remains to be seen, but it’s apparent that their current money management has been anything but fashionable.

Despite the news, shares for J.C. Penney rose approximately 12 cents. Though the stock has lost nearly two-thirds of its value since this time last year, both Ken Hannah and Ron Johnson remain confident that their strategy will begin to turn fortunes in favor of J.C.