EXCLUSIVE
JCPenney is having credit problems again.
CIT — the largest commercial lender in the US apparel industry — has abruptly stopped financing deliveries from smaller manufacturers to Penney stores, The Post has learned.
The reason for the credit clampdown couldn’t immediately be confirmed, and representatives of CIT and Penney didn’t immediately respond to requests for comment.
Penney shares plunged more than 10 percent to $14.60 in regular trading after CIT’s move was first reported on nypost.com.
Some insiders speculated that CIT got skittish after getting a peek at Penney’s financials, which have been deteriorating as the department store scrambles to recover from a botched turnaround bid under former CEO Ron Johnson.
“CIT met with (Penney officials) yesterday,” according to one source close to the situation. “I assume they got a thorough briefing and didn’t like what they heard.”
According to a second source, however, CIT tightened Penney’s credit “deliberately to get attention” after the struggling chain had denied CIT’s recent requests to see its financials.
“This isn’t necessarily an indication of a big concern about Penney’s risk,” the source said, predicting that the situation will soon be resolved, possibly with Penney allowing CIT more frequent access to data.
CIT alerted clients of the clampdown early yesterday before its meeting with Penney, and has left it in effect since, according to a source.
CIT’s policy move — which only affects future orders and doesn’t impact deliveries that have already been scheduled — comes despite an aggressive financing deal this spring arranged by Goldman Sachs, which raised $1.75 billion in cash backed by Penney’s real estate.
Penney CEO Mike Ullman, who took the reins from Johnson in April, has moved to reintroduce the traditional sales events and coupons that Johnson had scrapped in favor of a disastrous flat pricing strategy.
Even so, sales this summer have been “lackluster,” according to one executive at a major Penney supplier.
Penney, which stopped reporting monthly sales last year under Johnson, is slated to report second-quarter earnings next month.
“It just shows the growing concern over performance at JCPenney since they are not giving out monthly sales data anymore,” said David Tawil, co-founder at Maglan Capital, adding that he wasn’t able to confirm CIT’s move.
“No one wants to wait until the earnings come out to make decisions for merchandise that’s shipping out for Decenber and further out.”
Tawil and other industry experts said the practical effect of CIT’s clampdown on Penney’s inventory flow could be modest, as the bulk of Penney’s stores are supplied by apparel giants such as PVH, Jones Group and VF Corp.
“The upshot could be that JCP ends up dealing without CIT,” according to a source, noting that the retailer would likely be reluctant to extend collateral to resolve the situation. “They can just start working directly with the suppliers, paying them a little faster.”
jcovert@nypost.com