Chris Lau, Kapitall: Department store stocks like J.C. Penney rely on shoppers to move their products. And to pay off their debts. Retail stocks are among the most tricky to evaluate, especially for value investors. Sometimes the valuation is so compelling that it seems almost too good to be true. A department store stock like J.C. Penney (JCP) falls under that category. Read more on retail from Kapitall: Bed, Bath, and Beyond Takes on Titan of Retail Since peaking at $27, shares are down steadily and finally sold off sharply from $10 in late September. Shares of J.C. Penney are now fighting to hold the $8 level, a price not seen since 1982. That means at this price, J.C. Penney is worth just 0.15 price to sales and 0.76 price to book. No money, more problems J.C. Penney has substantial debts. For the quarter ending July 31, 2013, long-term debt rose to $4.85 billion, up from $2.87 billion in the previous quarter. Net income was negative in each of the last four quarters: No reversal in sight? Short float for JCP is at a lofty 23.7%, and bears are in control. It looks as though shares will keep drifting lower. Despite the dire situation, J.C. Penney plans to replace a board member with Stephen Sadove, the CEO of Saks. Meanwhile Geraldine Laybourne stepped down from the board. J.C. Penney has operational challenges, but it is not impossible for sales to turn around. The problem J.C. Penney faces is not similar to that of Abercrombie & Fitch (ANF), whose fashion trend is waning for consumers. Sales need to improve… quickly Negative cash flow and high inventory is at the heart of the problem for this retailer. J.C. Penney needs to improve sales for each of the next few months. This means winning back the customers it alienated in the last few years.