JC Penney (NYSE:JCP) is about to release earnings. Ponder this Bear Case Scenario:
Yes the stock is down down and down yet again.
JC Penney is rapidly losing out to other higher end retailers such as Macys who are rapidly nibbling away at JC Penney’s core customer by offering value deals.
JC Penney relies on lower income spending. Cuts in welfare and high unemployment dig into any possible growth. The JC Penney does not have much purchasing power.
Despite sales and promotions customers are hard to bring back. If JC Penney goes off the radar as a choice they are done for.
JC Penney used to be middle America’s store. Wal-Mart stole its MoJo. JCP does not seem to have a way to get it back.
Possible capital infusion will dilute existing shareholders who have borne the risk so far.
Bankruptcy is not out of the question. After all it was good for Donald Trump.
George Gutowski writes from a caveat emptor perspective.