New Carmel company to boot J.C. Penney off S&P 500

November 25, 2013

A new Carmel-based company will replace struggling retailer J.C. Penney Co. on the Standard & Poor’s 500 index, according to a statement released Friday by S&P Dow Jones Indices, which runs the benchmark stock index.

J.C. Penney, which is trying to bounce back from its worst sales year in two decades, will be replaced by electronic security company Allegion, which is being spun off by Irish industrial conglomerate Ingersoll-Rand Plc.

Allegion will have its North American headquarters and most of its executive team in Carmel. Shares in the new company will begin regular trading Dec. 2.

J.C. Penney’s market value fell 37 percent this year, to $2.7 billion, making it “more representative of the mid-cap market,” S&P said.

Allegion, which makes residential and commercial door locks, has a market capitalization of $4.2 billion.

The S&P 500 change will take place after the close of trading on Nov. 29, S&P said. The revisions in the benchmark equity index may prompt money managers to shift holdings to match it. About $5.14 trillion was benchmarked to the gauge, according to the S&P website.

J.C. Penney will bump Aeropostale Inc. from the S&P MidCap 400 Index, and Aeropostale will displace Corinthian Colleges Inc. from the S&P SmallCap 600.

Shares of Plano, Texas-based J.C. Penney have fallen 55 percent this year as the retailer reported quarterly losses in each period since mid-2011, including $489 million last quarter. J.C. Penney was up 32 cents Monday afternoon, to $9.19 a share.

J.C. Penney CEO Mike Ullman, who returned as CEO in April to replace Ron Johnson, has restored promotions and popular private-label brands while ending his predecessor’s remodeling plan. He also raised about $4 billion to try to give the company enough cash to complete a turnaround.

Revenue declines slowed in the quarter ended Nov. 2 and the department-store chain said sales and profit margins would improve during the holiday shopping season.
 

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