Moody’s: J.C. Penney Faces Lofty Sales, Profit Goals

J.C. Penney Co. Inc. has made “significant” progress since Myron “Mike” Ullman 2nd’s return as chief executive officer nearly two years ago, but will need to step up its game if it’s to meet the upbeat projections — and substantial debt maturities — awaiting ceo-designee Marvin Ellison. According to a study by Scott Tuhy, vice president and senior credit officer at Moody’s Investors Service, Penney’s outlook for growth in sales and profitability over the next five years, laid out at an October Investor Day, tends to err on the side of bullishness, beginning with sales plans that call for annual growth of 5.7 percent to reach its goal of $14.5 billion in revenues, from $12.26 billion last year, and on which its profitability goals are based. “It has only managed to achieve this [sales growth] once, in 2005-2006, when consumers went on a debt-fueled spending binge,” Tuhy wrote. Moody’s believes that sales growth is more likely to be about half as rapid — 2.7 to 2.8 percent — in the next few years, which would still exceed its “average growth for seven out of the past 11 years,” even when weak results from the 2008-2009 fallout and the sales contractions under former ceo

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