September has been a surprisingly good month for stocks, given the chaotic interest-rate environment and the dog-and-pony show that's once again getting under way in Washington. Since the end of August, the S&P 500 (^GSPC -0.88%) is up by 3.5%.
But not all stocks have felt the love equally this month, as 88 of the index's 500 components are trading lower since September got under way. The worst of the bunch is J.C. Penney (JCPN.Q), the ailing Texas-based retailer.
The trials and tribulations of J.C. Penney are now well known. In November 2011, it hired Ron Johnson, the former head of retail operations at Apple, to succeed then-chief executive officer Mike Ullman. Johnson proceeded to "transform" the company, from one based on daily discounts to something more akin in the eyes of consumers to his previous employer, Apple.
The only problem was that Johnson's idea and execution failed. By ostracizing its current customer base before building a new one, he oversaw one of the most dramatic declines in same-store sales in retail history. Over the past 12 months, sales at the retailer's stores have fallen by more than 25%; the most recent quarter alone saw declines of 11.9%.
Given this performance, it was little surprise when J.C. Penney announced on April 8 of this year that it had fired Johnson and reinstalled his predecessor, Ullman, as CEO. "We are fortunate to have someone with Mike's proven experience and leadership abilities to take the reins at the Company at this important time," Chairman of the Board Thomas Engibous said. "He is well positioned to quickly analyze the situation J.C. Penney faces and take steps to improve the Company's performance."
But the story doesn't end here. At the end of last month, the retailer's largest shareholder, Pershing Square, a hedge fund run by the controversial Bill Ackman, announced that it had sold its entire stake in the retailer, acknowledging defeat and absorbing a nearly $500 million loss. "Clearly, retail has not been our strong suit, and this is duly noted," Ackman said in a letter to his investors following the move.
And most recently, the company reversed itself over the course of two days and decided that it needed to raise more capital. During a meeting with analysts and investors this past Wednesday, Ullman reiterated that "the company had sufficient liquidity to end the year." By the end of the next day, however, he announced a hastily arranged secondary offering of 84 million shares.
The abrupt about-face coupled with the dilutive impact on existing shareholders sent the company's stock sharply lower, ending the week down by more than 30%. The final plunge left it in sole possession of the crown of worst performing stock on the S&P 500 this month.
