Tillier: Worst Isn't Over for J.C. Penney

NEW YORK ( RealMoney) -- I don't wish to brag (who am I kidding? of course I do!) but on Jan. 7 I wrote a cautionary piece about Best Buy ( BBY). It had closed the previous day at $39.31 and lost about 25% at the open today after announcing December sales comparisons that could be politely described as disappointing. My negative view wasn't based on any pretense of knowledge about those numbers or on any complex technical analysis, just common sense.

BBY had risen significantly, not on particularly great results, but rather on relief that it was still in business. This is a terrible reason to invest in a company, as I suggested at the time. My dislike of Blackberry (BBRY) is based on the same thing, but a more pointed example comes today with the news that J.C. Penney (JCP) is closing 33 stores and shedding 2,000 jobs.

As JCP has fallen over the last few years, there have been several relief rallies. Each time, however, the hangover from the Ron Johnson tenure returns. This latest news has been greeted with selling, falling 7% at the open, which is just another nail in the coffin.

Those who keep picking levels to announce that the worst is over for JCP are making an understandable mistake. When a household name is in trouble, there is a tendency to think that it will survive, no matter what. J.C. Penney is huge and has been around forever. It is part of the landscape and has significant real estate holdings that must put a floor on the price. These and other reasons are often cited, but there is no such thing as "too big to fail" in retail.

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