NEW YORK —
J.C. Penney Co. CEO Ron Johnson hasn't run out of magic yet, as far as Wall Street is concerned.
The former Apple executive's soothing words drove the retailer's stock higher even after the company offered up grisly details Friday of a terrible second quarter.
The midpriced department store chain reported a bigger-than-expected loss and plummeting sales. Shoppers are still not buying into a bold new pricing strategy. Penney even withdrew its full-year profit guidance.
After the report, Moody's Investors Services downgraded Penney's rating deeper into junk-bond terrain.
The bleak performance marked the second-straight quarter of severe sales declines since Penney got rid of most steep, temporary discounts in favor of everyday lower prices. The report confirmed it's going to be a hard sell to shoppers who are used to big sale signs and coupons.
Yet, after appearing queasy in premarket trading, investors pushed up Penney's stock price by as much as 9 percent following some reassuring words from Johnson during a 90-minute conference call.
The shares ended up 6 percent, or $1.30, at $23.40 on Friday. The gains show Wall Street still wants to believe the mastermind behind the success of Apple's retail stores and Target's cheap-chic strategy has the magic to deliver.
"The more he sells the hope, the more investors are buying into it," Brian Sozzi, chief equities analyst for research firm NBG Productions, who is still staying on the sidelines as far as Penney's stock is concerned.
Johnson, dressed in a navy blue blazer, white shirt and blue jeans, remained confident and calm as he vowed he was sticking to the plan. He shared more details of his vision for creating a new breed of specialty department stores and said that the latest fixes to simplify the pricing plan are resonating with customers. He and CFO Ken Hannah also allayed concerns about how much cash the company has.