AP Retail Writer
NEW YORK (AP) -- J.C. Penney was the biggest loser Thursday.
Shares of J.C. Penney Co. plunged nearly 17 percent on Thursday, the largest decline on the Standard & Poor's 500 index on the day. The drop came a day after the department-store chain reported its fourth consecutive larger-than-expected quarterly loss on another steep sales decline.
Penney shares, which are now trading at around $18, now have lost nearly 60 percent of their value since early February of last year after CEO Ron Johnson revealed his plan to ditch hundreds of sales in favor of everyday low prices. After Johnson announced his vision in late January 2012, investors drove Penney's shares up 24 percent to $43 in a vote of confidence.
The stock drop is the latest sign that Johnson's turnaround strategy is failing on Wall Street as much as on Main Street. The company's quarterly and full-year results, which it reported Wednesday after the markets closed, revealed that shoppers still aren't buying it. But the sell-off shows that investors, too, are concerned that the plan won't work.
"I fear it will be much worse as consumers continue to walk away from J.C. Penney and its financial health continues to deteriorate," said Walter Loeb, a New York based independent consultant.
Penney's spokeswoman Daphne Avila declined to comment on Thursday's stock movement. But Johnson on Wednesday acknowledged to investors that the 1,100-store chain had made some mistakes. He also told them that Penney would start offering sales in stores every week.
"Experience is making mistakes and learning from them," Johnson told investors on Wednesday. "I have learned a lot."
If J.C. Penney's results are any indication, Johnson is right. Penney reported on Wednesday after the markets closed that it widened its quarterly loss to $552 million, or $2.51 per share. Revenue fell 24.8 percent to $12.98 billion.
Revenue at stores opened a least a year dropped 31.7 percent. The measure is a key indicator of a retailer's health. Customer traffic dropped 17 percent in the quarter, worse than the 10 percent drop in the third quarter.
Results for the full year were even more staggering. For the fiscal year, Penney lost $985 million, or $4.49 per share, compared with a loss of $152 million, or 70 cents per share, in the year ended January 28, 2012. Revenue dropped 24.8 percent to $12.98 billion.
It's a disappointing turn of events for Johnson, the mastermind of Apple's successful retail stores who took the top job at Penney in November 2011. A couple of months later, on Feb. 1 of last year, Johnson got rid of the nearly 600 sales Penney offered each year and lowered prices in the store by 40 percent. He also got rid of the word "sales" from the company's marketing.
But customers weren't responding to the changes, and Johnson has tweaked his strategy a few times, including bringing back the word "sale" in its marketing last spring. The latest change came early February when Penney began adding back more sales events and putting price tags on half of its merchandise to show customers how much they're saving by shopping at Penney.
Penney said that it's seeing positive results from its makeover of some of its stores with sectioned-off shops that feature different brands. The company plans to have 700 of its 1,100 stores nationwide remodeled in the coming years, but critics question whether the company is running out of time -- and money.
In November, Penney said that it would end the latest fiscal year with $1 billion in cash. But the company winded up ending the year with $930 million in cash, which was better than analysts had feared but below the company's target.
The company also told investors on Wednesday that it delayed $85 million in payments to its suppliers from the fourth quarter to the early part of the first quarter. That suggests they're running out of cash.
And two rating agencies -- Standard & Poor's Ratings Services and Fitch Ratings -- raised further concerns on Thursday about Penney's ability to meet its loan commitments. Both lowered their credit ratings on Penney, which were already in junk status, by one notch.
"Our analysis suggests (Penney) will deplete cash" in the third quarter, wrote Kimberly C. Greenberger, an analyst at Morgan Stanley in a report published Thursday.
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