Moody’s Investors Service is cutting its long-term ratings for J.C. Penney Co. one step lower into noninvestment of junk grade status.
Moody’s lowered the department store chain’s corporate family and probability of default ratings to “B3” from “Ba3.”
The outlook is “negative.”
Moody’s said the downgrades reflect its expectation that J.C. Penney’s fourth-quarter profitability will take a big hit as a result of the need to clear excess inventory.
Combined with continued sales declines in the fourth quarter, J.C. Penney will end up with significantly lower profits and ultimately a 2012 credit profile that warrants an even lower “Ca” rating, Moody’s says.
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