J.C. Penney Slashes Dividend

The dividend was cut almost in half, to 28.75 cents a share from 54.5 cents.
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Updated from 5:17 p.m. EST

J. C. Penney Co.

(JCP) - Get Report

said Monday it was cutting its quarterly dividend nearly in half in order to invest more money in strengthening its

flagging retail operations.

Penney, which owns about 1,150 department stores as well as nearly 2,900

Eckerd Drugstores

outlets, said its board had reduced the dividend payable Feb. 1 to 28.75 cents a share from 54.5 cents.

The announcement was made shortly before the stock market closed. Penney's stock fell to a 52-week low of 19 11/16 but recovered somewhat and ended down 5/8 at 20 1/2. Still, that price is 63% below the stock's 52-week high of 56 1/8. Penney's stock has been sliding steadily since June.

In a statement, James E. Oesterreicher, Penney's chairman and chief executive, said the dividend cut would enable Penney to reinvest a significant portion of its earnings to update its department stores, strengthen its Eckerd's chain and expand its reach in electronic commerce.

The news comes on the heels of weak November same-store sales results, typically when retailers start looking for strong holiday sales. Comparable-store sales fell 8.7%, while most of its peers were reporting higher or flat sales over the same period the prior year.

Wal-Mart

(WMT) - Get Report

and

Kmart

(KM)

, for example, reported November same-store sales increases of 5.6% and 1.4% respectively.

Penney, which is based in Plano, Texas, also said it would reduce its corporate debt by $4 billion following the completion of the sale of its credit card business to

General Electric Capital

.