JCPenney Co Inc. (NYSE:JCP) sits on the cusp tottering into the black abyss of bankruptcy. American retailers say someone has to go. JCPenney is a good candidate. Hedge fund resigns from board after its determined he has not been effective in increasing shareholder wealth. Chosen crown prince from Apple has also left the field. A huge secured term loan has been arranged to maintain liquidity. Earnings release talks about liquidity and how current management is trying to fix olde managements problems.
The only attempt at optimism is “Back to School” sales look optimistic. Everyone knows retail is all about Christmas. The buying should be substantially done about now but management is not talking yet.
The company is living on borrowed time. The retail equivalent of “Battle of the Bulge” is on. Must do desperation with an everything must work ethos is at work.
Watch for signs of bankruptcy within management comments as they extol the virtues of what may become strong points such as retail locations or logistics. They will try to enhance value to bankruptcy buyers who will be prepared to pick up pieces.
Watch for store activity, check out lines, how many parking spaces are used and how ell the rest of the mall seems to be doing when JCPenney is an anchor tenant.
There simply is no tomorrow for this one.
George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti