This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

J.C. Penney: A Band-Aid Won't Stop the Bleeding

NEW YORK (TheStreet) -- In a recent TheStreet article, Rocco Pendolla explained the disastrous state of Sears (SHLD) and his headline spot on: Sears: A Pathetic Picture Is Worth 1,000 Words.

Well, like Rocco, I have another picture for you worth 1,000 words.

Much like Sears, J.C. Penney (JCP - Get Report) has fallen on hard times. The Plano, Texas-based department store chain began as a public company in 1929 and grew at an incredible pace, with shares topping $85 in 2007. However, in 2009 the shares bottomed out to around $14, and more recently they sank to a two decade low of around $6.80.

Its shares currently trade around $6.50 and are down 28% for the year to date.

As the FAST Graph below illustrates, Penney is scrapping the bottom of the barrel, with no dividend and liquidity of around $2 billion ($1.7 billion in cash and $480 million of credit). That may seem like a lot of cash but remember, Penney has some off-balance sheet obligations to worry about.

As per the most recent 10-K, Penney's has 1,104 stores located in 49 states and Puerto Rico. Of these sites, the company owns 429 buildings and leases 775 stores (of which 123 are ground leased). That means Penney is obligated to pay around 775 landlords for its services, renting space primarily in malls across the U.S.

Penney's latest quarter saw red ink of around $490 million (in net income) and negative operating cash flow of approximately $700 million. The company's average sales per square feet have dropped from $160 in 2008 to $116 in 2012; a clear indicator that losses are mounting and liquidity is under fire.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
JCP $9.66 0.00%
AAPL $95.03 0.21%
FB $116.73 0.00%
GOOG $691.02 0.00%
TSLA $247.54 -0.07%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs