Fitch Ratings on Feb. 1 affirmed the long-term issuer default rating of J.C. Penney Co. Inc. at B+, with a "stable" outlook.
The rating reflects the "meaningful turnaround" in the Texas-based department store operator's business over the last few years, with EBITDA improving to over $1 billion in 2016 from $275 million in 2014, the rating agency said in a note.
Fitch expects comparable sales to remain flat during 2018 and 2019 amid "ongoing traffic challenges" for mall-based apparel retailers. However, the agency said weakness in women's apparel business will be offset by the company's investments in home and appliances, beauty and omnichannel offerings.
EBITDA is expected to be in the range of $900 million to $1 billion in the next 24 to 36 months.
Fitch also upgraded the company's senior unsecured notes to BB-/RR3 from B+/RR4. The retailer's $2.35 billion senior secured asset-backed loan facility due June 2022 is rated BB+/RR1, and the $1.635 billion term loan and $500 million senior secured notes due June 2023 are also rated at BB+/RR1.
