Penney downplays dismal Q2

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PLANO, Texas, Aug. 11 (UPI) -- Executives at J.C. Penney said the venerable U.S. department store chain's strategy is working despite a bruising second-quarter performance this year.

Penney reported a larger-than-expected loss for the second quarter and saw its debt downgraded by Moody's Friday, a move company leaders told reporters was not a sign of major trouble.

Penney said the company, based in Plano, Texas, currently had nearly $1 billion in cash and access to a $1.5 billion line of credit as it continued to carry out a nationwide upgrade of its stores and revamp of its marketing plan.

"We currently aren't using this line of credit at all," Chief Financial Officer Kenneth Hannah said, adding that credit downgrades in general can sometimes be a reflection of confidence in business strategies rather than purely the bottom line.

The Wall Street Journal said Chief Executive Officer Ron Johnson assured reporters the strategic transformation at Penney's was already paying dividends, including a 25-percent growth in sales of Levis blue jeans.

Johnson urged patience from Wall Street, calling Penney's transformation "a marathon, not a sprint."