Well, like Rocco, I have another picture for you worth 1,000 words.
Much like Sears, J.C. Penney (JCP) 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.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV