J.C. Penney Co. Chief Executive Officer Ron Johnson is finding it harder to convince bondholders than stockholders that his plan to turn around the fourth-largest department-store chain is "on track."
After the Plano, Texas-based company reported a loss that exceeded analysts' estimates on Aug. 10 and withdrew its annual profit forecast, J.C. Penney's shares reversed course to rise the most since January when Johnson told investors that he's "completely convinced that our transformation is on track." The company's $325.6 million of 7.4 percent notes due April 2037 dropped 1.5 cents on the dollar to 78.5 cents.
Johnson, the former Apple Inc. retail chief who joined as CEO in November, is trying to win back customers at the 110-year-old chain. While his hiring prompted a 17 percent one-day stock rise, the extra yield investors demand to own J.C. Penney's bonds rather than Treasuries has more than doubled to 7.66 percentage points, which would represent an extra $41.6 million in annual interest on each $1 billion of new financing.
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