J.C. Penney's Comparable Sales Are Up, But Investors Flee

NEW YORK ( The Deal) --  J.C. Penney Co. ( JCP) said Tuesday that comparable store sales for the fourth quarter were up about 2%, disappointing investors and sending the stock down more than 10% in afternoon trading to close at just above $5 per share.

Analyst reports said that comparable sales in December alone were likely down 1%.

The Plano, Texas-based department store retailer, however, said it has total liquidity, including cash and availability on its revolver, of about $2 billion.

"While 2013 brought a lot of change and challenges to JCPenney, the steady improvements in our business show that the Company's turnaround is on track. In spite of the significant headwinds facing all retailers this season, including unprecedented harsh weather conditions in many parts of the country, we delivered on our promise to generate positive comparable store sales growth in the fourth quarter," said Myron (Mike) Ullman, J.C. Penney's chief executive, in a statement.

The difficulty for J.C. Penney at this stage is improving results quickly enough to effect a turnaround before it runs out of cash.

Margaret Taylor, an analyst at Moody's Investors Service Inc. said liquidity should be adequate to help J.C. Penney survive the year, though making it through the seasonal trough, in the summer to fall, when retailers stock up on inventory before the holiday shopping season, will be tight.

One source of additional liquidity for J.C. Penney, however, could be its warehouses and its distribution centers, real estate that it has yet to monetize, according to a source.

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