Wall Street has been taking a second look at J.C. Penney in the weeks since controversial CEO Ron Johnson stepped down.
J.C. Penney said Monday that it secured a $1.75 billion loan from Goldman Sachs (GS). The announcement confirms reports late last week that that the retailer was nearing a financing deal with Goldman.
Investors were also encouraged Monday by a report in the New York Post that two major hedge funds had invested in J.C. Penney.
The loan from Goldman comes weeks after J.C. Penney announced that Johnson was stepping down as chief executive after just a year and a half.
Johnson, a former Apple (AAPL) executive, had embarked on an ambitious turnaround plan for J.C. Penney by transforming the department store chain into a collection of boutiques. He ditched older brands and announced plans to eliminate checkout counters in favor of mobile and self-checkout.
The results were dismal. J.C. Penney has been suffering steep losses, bleeding $427 million in the fourth quarter as sales fell 28% versus a year prior.
Johnson was replaced by his predecessor, Mike Ullman, who ran J.C. Penney for seven years prior to Johnson's arrival.
The loan from Goldman is an important part of the company's plan to strengthen its financial position, said J.C. Penney CFO Ken Hannah.
"This will give us the financial strength we need to meet our current funding requirements and build toward a successful future," Hannah said in a statement.
The five-year loan agreement with Goldman is in addition to the $850 million that J.C. Penney drew from its own $1.85 billion revolving credit facility earlier this month.
J.C. Penney said the money will be used as to meet ongoing capital needs and pay down debt.
Despite the recent rally, shares of J.C. Penney remain down 12% so far this year.
On StockTwits, some investors voiced concern about the company's long-term strategy as consumers continue to favor online retailers.
Others were more optimistic, calling for further gains in J.C. Penney stock.
Meanwhile, the leadership change at J.C. Penney raises questions about the investment strategy of Bill Ackman, the hedge fund manager who had backed Johnson's turnaround plan.
You know what they say. Timing is everything.
The market slid Friday after a terrible jobs report. Retail stocks were not spared. The SPDR S&P Retail exchange-traded fund (XRT) was down nearly 1%.
It makes sense. If the job market is going into another spring swoon, then consumers probably will spend less at the mall. So why on Earth were shares of J.C. Penney (JCP) up 4%?
J.C. Penney's problems are well-known at this point. The department store chain's sales MOREPaul R. La Monica - Apr 5, 2013 1:10 PM ET
J.C. Penney has few friends on Wall Street, but Thursday, the troubled retailer gained one more.
BTIG analyst William Frohnhoefer issued a "buy" rating, making him one of the few analysts to recommend purchasing J.C. Penney's stock.
Frohnhoefer also set a price target of $22 per share. That's more than 40% higher from where J.C. Penney's (JCP) stock is currently trading. Early Thursday, shares slid 1% to $15.53.
The call is a rare MOREBen Rooney - Mar 14, 2013 11:44 AM ET
On paper, it was a really tough quarter for J.C. Penney (JCP), but CEO Ron Johnson was successful in convincing investors that the company is moving in the right direction.
The retailer, which launched an overhauled pricing strategy in February, lost $147 million during the second quarter, nearly three times more than analysts were expecting. Sales were extremely weak, falling 23% overall from a year earlier, and same store sales, a key gauge MOREHibah Yousuf - Aug 10, 2012 12:57 PM ET
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