The shares fell 15 percent to end at $10.12 in New York. They earlier slid as much as 17 percent for the biggest intraday drop since Feb. 28, the day the department-store chain reported the lowest annual sales since at least 1987.

“Weak fundamentals, inventory rebuilding, and an underperforming home department will likely challenge J.C. Penney’s liquidity levels in the third quarter,” Kristen McDuffy, at New York-based analyst for Goldman, wrote Tuesday in a note to clients. “In order to safeguard against a potentially poor fourth-quarter holiday season, it is likely that management will look to build a bigger liquidity buffer.”

McDuffy initiated J.C. Penney’s debt at an underperform rating.

Since taking over in a second stint as chief executive officer in April, Mike Ullman has borrowed money to shore up the finances, and re-introduced discounts and brought back merchandise to help recover from his predecessor’s failed attempt to transform the company. The retailer has taken out a $2.25 billion loan, arranged by Goldman, and drawn down $850 million from its credit revolver.

Cheap Financing

The chain is in talks to raise more cash, people familiar with knowledge of the matter said Sept. 20. J.C. Penney doesn’t have immediate cash needs and is exploring fundraising amid shareholder pressure to take advantage of cheap financing, said the people, who asked not to be named as the deliberations are private.

Daphne Avila, a spokeswoman for J.C. Penney, declined to comment in an e-mail on whether the Plano, Texas-based company was seeking ways to raise more cash.

“The stock movement is suggesting that negotiations for the capital raise are serious,” said Paul Swinand, an analyst for Morningstar Inc. in Chicago.

Another report from Cleveland Research said the third quarter looks “more difficult than initially expected.” The return to more promotions doesn’t appear to be generating better sales or store visits, the firm said.

Charles Grom, an analyst for Sterne Agee & Leach Inc. in New York, countered those concerns in a note he wrote to clients after meeting with Ullman, the chain’s chief executive. Ullman said sales during the back-to-school shopping period showed “good progress” and that merchandise brought in to replace what former CEO Ron Johnson added is selling, Grom said in describing Ullman’s comments.

Liquidity Forecast

J.C. Penney management also said it would end the year with $1.5 billion in liquidity, including $1.2 billion in cash and $300 million available in its revolver, said Grom, who recommends buying J.C. Penney shares. That mirrors what Chief Financial Officer Ken Hannah said last month when the chain reported second-quarter results.

Hedge funds Glenview Capital Management LLC and Hayman Capital Management LP reported increased stakes in J.C. Penney this month, betting on a revival. The retailer’s sales decline slowed last quarter to 12 percent from 23 percent in the same period a year earlier.

Before Wednesday, J.C. Penney’s stock had declined 40 percent this year, compared with a 19 percent gain for the Standard & Poor’s 500 Index.