OLD COPPER COMPANY 
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(Reuters) - J.C. Penney Co Inc (>> J.C. Penney Company, Inc.) shares plunged nearly 20 percent on Wednesday, their worst decline ever, wiping away $1.43 billion in market value a day after the retailer shocked Wall Street with a much worse-than-expected drop in sales and by scrapping its dividend.
A number of leading Wall Street firms also lowered their price targets on the company.
Penney shares closed down $6.57 at $26.75 on the New York Stock Exchange. The decline was the worst percentage decline since the company listed its shares on the exchange in 1929, according to Center for Research in Security Prices at the University of Chicago Booth School of Business.
The move pushed the stock well below the $30.11 closing price on June 13, the day before it named Apple Inc (>> Apple Inc.) retail store head Ron Johnson as chief executive.
The retailer said on Tuesday after the stock market close that sales at stores open at least a year fell 18.9 percent in the first quarter, which coincided with the kickoff of its multi-year overhaul, and reported a loss, missing Wall Street estimates on both counts by a wide margin. The company also scrapped its dividend.
JP Morgan cut its price target on Penney's shares to $40 from $49, Goldman cuts its target to $31 from $35, and Citi lowered its target to $40 from $50.
Option turnover was 6.7 times the average daily levels with 129,000 puts and 67,000 calls traded in Penney, according to option analytics firm Trade Alert.
Investors often turn to equity puts, granting them the right to sell shares at a fixed price any time until expiration, to speculate on potential weakness in the stock or to protect an existing long position in the shares.
Penney is in the process of a multi-year transformation, beginning with a new pricing strategy that eschews the use of coupons and sales events in favor of everyday lower prices on most items.
Johnson told analysts at a meeting on Tuesday that the company had not adequately conveyed to shoppers, accustomed to discounts, the benefits of its pricing strategy.
Deutsche Bank analyst Charles Grom said in a research note that Johnson "strongly believes that same store sales will be positive by February 2013."
Barclays analyst Robert Drbul lowered his full year profit estimates, citing the efforts Penney will need to exert "to re-educate the JCP consumer away from coupons and discounts."
Johnson faulted the company's advertising.
"It is not doing the hard work we need it to do right now," Johnson conceded.
Penney's ad campaign has featured comedienne Ellen DeGeneres and been designed to entertain and change the chain's image, rather than emphasize merchandise.
But in April, Penney started running ads called "Do the Math," which uses a summer dress to illustrate how its everyday lower price comes out to less for a shopper than a sale and a coupon.
The next phase of the transformation will come in August when the first of the 100 boutiques each store will house are unveiled. At Tuesday's analyst meeting, Penney announced deals with designers like Vivienne Tam, Betsey Johnson and Michael Graves.
Penney's largest shareholder, William Ackman, on Tuesday reiterated his support for Penney's efforts during its multi-year turnaround.
(Reporting by Phil Wahba in New York, additional reporting by Doris Frankel and Brad Dorfman in Chicago; Editing by Leslie Gevirtz and Phil Berlowitz)
