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Fitch affirms J.C. Penney's issuer default rating; outlook stable

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Fitch affirms J.C. Penney's issuer default rating; outlook stable

Fitch Ratings on March 9 affirmed the long-term issuer default ratings of J.C. Penney Co. Inc. and its unit J.C. Penney Corp. at B+, with a stable outlook.

The agency also assigned a BB-/RR3 rating to J.C. Penney Corp.'s new $400 million 8.625% senior second lien secured notes due 2025 and downgraded the unit's senior unsecured notes to B+/RR4 from BB-/RR3.

The rating reflects a "meaningful" turnaround in the Texas-based retailer's business over the last few years. J.C. Penney's EBITDA reached $886 million in 2017 from $275 million in 2014 on the back of growth in sales and cost reductions.

Fitch said it expects EBITDA to be in mid-$800 million in the next 24 to 36 months. It also expects the company's comparable sales to counterbalance the weakness in women's apparel, which makes 24% of its sales, with investments in home and appliances, beauty, private brands and multichannel offerings.