J C Penny Will Disappear in 2014

J.C. Penney Co. Inc. (NYSE: JCP) has been in trouble for some time. Those who still believe in its future as an independent retailer point to the company’s ability to get a loan of $2.25 billion from Goldman Sachs and other investors, secured primarily by real estate and leases. That money, optimists claim, will last until CEO Myron Ullman can turn the company around. Ullman recently has returned to the company’s top job.
On the other hand, many believe the company cannot come back from the unprecedented sales losses it has suffered in recent years. The industry is very competitive, both at brick-and-mortar stores and online. Big-box retailers from Walmart to Target and successful department stores such as Macy’s are larger than J.C. Penney and are growing. At the e-commerce level, companies such as Amazon.com and eBay, are gobbling up market share. Amazon has done damage to retailers much healthier than J.C. Penney.
Even in a less competitive environment, a J.C. Penney comeback could not be sustained. For the year ended February 3, the company reported that comparable store sales dropped 25.2%, revenue fell 24.8 % to $12.985 billion and Internet sales were $1.02 billion, a plunge of 33% from the previous year. While the most recent quarter was considered an improvement with sales down 16.4%, in reality it was nothing more than a brief reprieve. There is absolutely no reason to believe that J.C. Penney’s prospects will improve.
By Douglas A McIntyre