JC PENNEY COMING IN FOR A LANDING

31 comments

Posted on 9th November 2012 by Administrator in Economy |Politics |Social Issues

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I got my glossy JC Penney ad in my newspaper this morning. I threw it out, just like millions of Americans do every day. I have previously detailed the downward spiral of JC Penney in previous posts. They will join the ranks of that great retailer Montgomery Ward in the retail graveyard in the not too distant future. Their delusional egomaniacal, former Apple executive, CEO is driving the company into bankruptcy at a breakneck pace.

http://www.theburningplatform.com/?p=38725

http://www.theburningplatform.com/?p=34521

The brilliant Wall Street shysters are “shocked” with the results reported this morning. These paid shills will come out and recommend buying this piece of shit because the CEO has a brilliant plan. The free haircuts on Sunday are going to save the day. Here is a link to their horrific results and my assessment:

http://finance.yahoo.com/news/j-c-penney-company-inc-120000473.html

  • They lost $211 million in one quarter and have lost $734 through nine months.
  • Their sales declined by a mind boggling 26.6% versus last year. That is a $1.1 billion sales decline versus the prior year. Picture an airplane headed straight into the ground at 600 miles per hour.
  • Their gross margin collapsed from 37.4% to 32.5% as NO ONE is buying their shit. Imagine their Christmas season.
  • They are now selling off assets to generate cash to survive. These idiots were buying back stock, just like Kohls, just over a year ago.
  • This company employees 159,000 people. It is and will be laying off thousands. Thousands more will see their hours cut.
  • The balance sheet will reveal when this stinking carp goes belly up. They have burned through $560 million of cash even after selling off $279 million of assets to raise cash. They have $525 million left and their operations are deteriorating rapidly. At this rate of burn, they will surely be done during 2013.
  • The only thing saving them now is the fact that they don’t have debt due in the next year and they have reduced their inventory by $1 billion. Don’t look for a big selection at JC Penney during the holiday season.
  • With their free cash flow declining by $1.3 billion in nine months, they are in a death spiral.

The only way for the moron running this company to save it would be to reverse course on his No Sales mantra and to close his 20% worst performing stores immediately. His hubris and ego will not allow him to do this. He will go on his conference call and tell the Wall Street douchebags that his vision will eventually achieve success. In the near future you will see an announcement that JC Penney has declared bankruptcy, will be laying off 75,000 people and closing 600 stores. Book it.

 

31 Comments
  1. Administrator says:

    J.C. Penney Loss Wider Than Estimated as Turnaround Falters

    J.C. Penney Co. (JCP) reported a third- quarter loss that was larger than analysts estimated as Chief Executive Officer Ron Johnson struggles to overhaul the fourth- largest U.S. department-store company. The shares fell in early trading.

    The net loss of $123 million, or 56 cents a share, in the three months ended Oct. 27 compares with a loss of $143 million, or 67 cents, a year earlier, the Plano, Texas-based company said today in a statement. Excluding items including store restructuring and management-transition costs, the loss was 93 cents a share. The average of eight analysts’ estimates (JCP) compiled by Bloomberg was for a 7-cent loss.

    Johnson, the former Apple Inc. (AAPL) retail chief who joined as CEO last year, has lost customers as he transforms most J.C. Penney stores into collections of branded shops and implements an everyday low pricing strategy. He has worked to win back shoppers through offers such as a $10 in-store coupon, 30 percent discounts off clearance items, free children’s haircuts in August and free family portraits this month.

    “They’re in such a promotional category and their competition clearly isn’t everyday low price, and so they need to play ball and they need to provide a catalyst for people to shop,” Erika Maschmeyer, an analyst at Robert W. Baird & Co. in Chicago, said in a telephone interview before the report. “People will be interested to hear what kind of impact those promotions have.”

    She rates the shares neutral, the equivalent of a hold.

    Stock Slumps
    J.C. Penney fell (JCP) 9 percent to $19.73 at 7:26 a.m. in New York. The shares lost 38 percent this year through yesterday, compared with gains at Macy’s Inc., Kohl’s Corp. (KSS) and Sears Holdings Corp. (SHLD)

    The retailer’s third-quarter sales fell 27 percent to $2.93 billion, trailing analysts’ average estimate of $3.27 billion. Revenue declined by more than 20 percent in the first and second quarters. Same-store sales fell 26 percent in the third quarter, more than the 15 percent decline estimated by analysts surveyed by researcher Retail Metrics Inc.

    Like or Dislike: Thumb up 4 Thumb down 1

    9th November 2012 at 8:20 am

  2. Kill Bill says:

    Has the Ex iApple CEO gone the Rmoney route?

    Im sure JCP will recover during thanksgiving due to all the Turkey they will sell. Maybe they can shove some out of a helicopter a la WKRP
    wkrp.jpg

    Well-loved. Like or Dislike: Thumb up 9 Thumb down 0

    9th November 2012 at 8:58 am

  3. harry p. says:

    So there is going to be some really great sales on their merchandise in the near future? Outstanding

    A going out of business sale might actually get me in the door looking for deals.

    Well-loved. Like or Dislike: Thumb up 9 Thumb down 0

    9th November 2012 at 9:00 am

  4. Hope@ZeroKelvin says:

    I stopped shopping at JC Penney about 5 years ago when the quality went completely south with the selection.

    Even their bedding, which was of great quality, is complete shit these days. The last sheet set I bought fell apart in about 1 year, the coverlet in about 6 months.

    For a while that Arizona line for kids was pretty good, bought the boys clothes for my daughter (which she preferred) and it was in good enough shape for my son to wear.

    The problem is not JC Penney itself going down, which is bad enough. The problem is that JCP is usually one of the anchor stores in a big mall. People come to the malls in the first place for the big anchor stores, then stroll around and buy stuff from the smaller stores.

    I guess we can replace JPC as an anchor with the Dollar Store that caters to the EBT crowd, yeah, that’ll work well.

    images?q=tbn:ANd9GcSUg7c_rggbB6dl8aC8rN2YJvWYyYjiyQFBoknUYJVggopKAc0I

    Or, as it will be more likely, our children and grandchildren, impoverished, starving, illiterate, beaten, can scavenge a miserable existence among the ruins of our once great country.

    th?id=I.4569657023859051&pid=1.7&w=228&h=154&c=7&rs=1

    Elections have consequences, ya buddy.

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 1

    9th November 2012 at 9:17 am

  5. ThePessimisticChemist says:

    Next official reception will be kicked off on the news that Christmas sales were much lower than expected.

    Government then passes legislation to bail out the retailers. People continue to not shop from those locations because (drumroll please) they don’t have money, or are too stupid to spend money on needs (clothes) rather than wants (iPhone 5.1).

    Said retailers limp on until the cash runs out, and THEN go completely belly up, dumping a couple hundred more thousand jobs from our economy.

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 1

    9th November 2012 at 9:19 am

  6. ThePessimisticChemist says:

    recession, not reception

    Like or Dislike: Thumb up 4 Thumb down 0

    9th November 2012 at 9:19 am

  7. sangell says:

    Just a thought. If American incomes are going backwards then maybe so should American business. For example, McDonalds, now experiencing its first sales decline since 1983, might want to consider going back to the original McDonalds format. No dining area or seating of any kind. Basic menu of hamburger and french fries lunch and dinner, sausage biscuit, egg mcmuffin breakfast. As I recall, a McDonalds franchise only had maybe a half dozen employees cranking out hamburgers and fries with one person at the counter grabbing them the product and throwing it in a bag. Customer only had to give the quantity of burgers, fries and sodas he required.

    I’m a guy so my opinion about retail stores is probably irrelevant but they are too big and the men’s clothing is hard to find. Its always seems to be in the most distant part of the store. All the display racks hide the things you are looking for ( and make it easy for shop lifters to steal). Quality haberdasherys don’t need a lot of square footage. They keep their garments in neat stacks along the walls so you can move about and see it not fondle it. Seems to me department stores need to shrink and allow a person to browse not hunt.

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 0

    9th November 2012 at 9:36 am

  8. Administrator says:

    FEMA can repurpose our ghost malls as internment camps. It’s a win win.

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 0

    9th November 2012 at 9:37 am

  9. Eddie says:

    Okay…I think JCP is, at least in this part of the country, THE store (besides Walmart) for the FSA to buy stuff. They are the low end big box mall housewares and clothing store.

    Their demise, bad management aside, is due to those fixed income FSA’ers having less money to spend because of inflation. It looks like a direct affect to me. I have always maintained that inflation would eventually starve out those on social welfare programs, because they are the most affected by inflation…and regressive taxation of various forms.

    When Walmart begins to be affected, I’ll know I’m right.

    Well-loved. Like or Dislike: Thumb up 11 Thumb down 0

    9th November 2012 at 10:16 am

  10. JIMSKI says:

    Brand new TARGET around the corner from the shop. Local city bought 6 houses and changed zoning to wedge this monster into a residential area. Sales are 60% less than break even for the first year. Just heard they are going to shutter it after the first of the year.

    So how much does a 320,000 square foot store cost to build and how bad is it when they are going to close it?

    Well-loved. Like or Dislike: Thumb up 11 Thumb down 0

    9th November 2012 at 10:22 am

  11. Administrator says:

    JIMSKI

    An IKEA store of a similar size would cost about $40 million or $50 million to build, including parking lot, land, fixtures, etc.

    Well-loved. Like or Dislike: Thumb up 6 Thumb down 0

    9th November 2012 at 10:25 am

  12. Thinker says:

    And, chances are, they have “grants” from government, tax abatements, etc. to make it more affordable to build, right, Jim? But no clause to pay it back if/when they go out of business.

    Well-loved. Like or Dislike: Thumb up 5 Thumb down 0

    9th November 2012 at 10:35 am

  13. Administrator says:

    JC Penney Enters the Death Throes Phase
    By Jeff Macke

    This morning JC Penney (JCP) turned in one of the worst earnings quarters in the history of publicly held retail companies. It was that bad. The company is spinning it as best they can. They’re using words like “challenging” and claiming the remodeled JCP concept stores are performing well but getting dragged down by legacy issues.

    Don your protective goggles and run through the figures for yourself, if need be. All you really need to know is that JCP is running out of time, money and ideas. There isn’t a bright side, only varying degrees of murky.

    None of which means JCP stock is going to zero in a straight line. Down 42% in 2012 and about 75% since 2007, there’s a decent amount of bad news in the name. It’s a year too late to short JCP and a decade too late to buy.

    JCP is stock is like a shark that jumps into your canoe. Standing up and trying to kill JCP on the short side brings too many other risks into play unnecessarily. Getting positive and trying to save the beast will get you torn to shreds.

    For most investors only smart move is to keep paddling and wait for JCP to die.

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 0

    9th November 2012 at 10:40 am

  14. Administrator says:

    Thinker

    We rarely received tax benefits from the government. They would usually rake us over the coals to improve their roads and make “contributions” to whatever they thought was a good cause in the community. We caused traffic headaches for most communities.

    We paid millions to the government drones in East Palo Alto to get that store built. We even obligated to hiring the mongoloids from that community.

    Well-loved. Like or Dislike: Thumb up 6 Thumb down 0

    9th November 2012 at 10:45 am

  15. Administrator says:

    Do you know how hard it is to generate NEGATIVE 26% comp store sales?

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 0

    9th November 2012 at 10:48 am

  16. Colma Rising says:

    The Ikea in EPA helped push the municipality below the #1 per-capita murder mark.

    I’d rather brave the Emeryville trip…. through traffic, o’er bridges and through da ghetto…. than go to fucking EPA.

    Ikea: Saving ‘merica, one plank of mdf at a time.

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 0

    9th November 2012 at 10:56 am

  17. Colma Rising says:

    JCP needs a bin full of tea lights.

    Everyone grabs a bag from a bin full of tea lights

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 0

    9th November 2012 at 10:57 am

  18. Wyoming Mike says:

    Dear Admin, I respectfully must disagree with your entire analysis. Have you not heard the new JCPenney marketing plan???? They’ve shortened their name to JCP to have the ability and space to get into millions of Twitter posts. It’s utterly brilliant and will have them turned around in no time!

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 1

    9th November 2012 at 10:59 am

  19. Colma Rising says:

    Mike:

    Now it will be easier to twitter up a fucking flash mob. Genius.

    Well-loved. Like or Dislike: Thumb up 11 Thumb down 0

    9th November 2012 at 11:14 am

  20. Cynical30 says:

    JIMSKI & Admin:

    And as vacant they trade on the open market anywhere from $5/SF – $20/SF (if at all). Range dependent on location and demographics. That’s $1,600,000 – $6,400,000 realistically in todays market.

    Well-loved. Like or Dislike: Thumb up 6 Thumb down 0

    9th November 2012 at 11:17 am

  21. TeresaE says:

    Wow, who would have thought that forcing American companies to compete with Asian companies could ever result in American citizens having less money to buy the items being sold?

    I just don’t understand it! Low Asian prices were supposed to make all of us that lost jobs, paychecks and lifetime of work and earnings, even!

    Damn, I don’t get it. Clinton should come and explain it to me. He can also explain how he went from unable to qualify for a $7 million loan, to a net worth that could waste $25 million on a run for the wifey. I’m sure they are 100% unconnected, just a coincidence.

    Anyway. JCP has been catering to seniors for a long, long, time. One of my gram’s favorite stores for picking up new polyester blouses or muumuus and house-dresses.

    Between inflation in food, medicine, medicaid insurance, gas, energy and the absolute destruction in interest/investment incomes, who’d thought that the seniors would be cutting back?

    I just don’t understand! Don’t they realize that JCP will give them a 25% interest credit card to buy their, increasingly shoddy, merchandise?

    Us Americans better get with the program. Benny and his banks are doing everything in their power to fix the country by getting seniors to trade government-supplied fiat for Asian produced goods at usurious interest rates.

    They have led us to the promised-land water, how dare we not partake of their generously offered opportunity at drowning?

    Well-loved. Like or Dislike: Thumb up 10 Thumb down 0

    9th November 2012 at 11:20 am

  22. Chicago999444 says:

    Contrary to popular middle-class myths, the FSA and EBT crowds do not shop at dollar stores.

    The only people who shop at dollar stores are frugality fanatics like me and my mother, and the rich Asian people I know as I am sort of “embedded” in the local Asian community here in Chicago.

    The Link card women and their gangbanger boyfriends shop at Macy’s and buy their groceries at the local Safeway or Treasure Island or even Whole Foods. Only the best for this crowd, who I see buying $30 decorated birthday cakes and megatons of overpriced processed foods, including ice cream treats and desserts, which usually comprise about half the stuff I see in their carts. These women are always wearing extremely nice clothes in the latest styles from the mainstream emporiums. Lots of Coach handbags – not knockoffs.

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 0

    9th November 2012 at 11:34 am

  23. ThePessimisticChemist says:

    @Chicago999444 – This halloween saw a record number of people who walked around without even making a shitty attempt at a costume.

    They were FSA and EBT peeps, and when the few times I mentioned it they just gave me a sad look and said “we ain’t got the money”.

    I can’t believe they would say that with a straight face, when I can see both parents are wearing designer jeans that retail for $80+, designer handbags (unfortunately I can spot a fake Coach purse from a mile off….not a skill I’m proud of), and wool jackets that probably cost $100+

    Their kids were wearing NFL apparel, which are 2-3X more expensive than that same article of clothing from Wal-Mart.

    These people are dressed far nicer than me (Wranglers, old work t-shirt, and 3 year old new balance with holes in the sole), and most of them told me about their economic plight with a sympathetic ear. I guess because I dress down once I get home (raking leaves) and live in a poor part of town I must be on the government teat like them.

    “I ain’t got no costume, IM ME, now give me candy!”

    I wanted to take a willow switch to the little ass, but I was helping an elderly neighbor hand out candy and didn’t want to upset him.

    Well-loved. Like or Dislike: Thumb up 5 Thumb down 0

    9th November 2012 at 12:03 pm

  24. Ron says:

    JCP has always been an expensive store with very little appeal. I saw the future in a special about how in Africa people buy a large bundle of clothes out of an ocean container from the usa, than go sell them.I think this is a good model for selling in the usa also.

    Like or Dislike: Thumb up 2 Thumb down 0

    9th November 2012 at 12:11 pm

  25. sangell says:

    The little town near me is getting a new grocery store for the FSA but the taxpayers have to pay for it.
    Seems they have driven out all private businesses in their crime infested neighborhood so the city decided they would offer a developer a decaying ‘community center’ they owned. The developer specializes in some federal program that offers subsidies to businesses they will go into ‘underserved’ communities so he can make a profit building these uneconomic little strip malls once he gets a letter of intent from a crap grocery chain and a property tax abatement from the city.

    Wouldn’t you know it there just happens to be a crap grocery chain that specializes in redeeming EBT cards in ‘underserved’ communities. Sav-a-Lot grocery store. They are smaller than your normal supermarket and sell horrible off brand foods that are probably made by companies operating under another government funded ‘minority enterprise’ program. You know something like Lakesha’s homestyle chitlins in a can or Uncle Turdell’s macaroni and cheese. Unfortunately, as a condition of receiving the federal grant, subsidy or whatever the scheme involves, the store cannot sell alcoholic beverages so the local drunks and gangbangers will still have to travel outside the neighborhood for their other food group.

    Like or Dislike: Thumb up 4 Thumb down 0

    9th November 2012 at 12:37 pm

  26. DaveL says:

    WTF? Bain Capital hasn’t come in and carved this company up and shipped the jobs to China?

    Like or Dislike: Thumb up 5 Thumb down 2

    9th November 2012 at 2:19 pm

  27. Hard Worker says:

    What is wrong with these educated investors that keep lighting the candle for JCP?
    I worked some extra hours at my neighborhood store and saw what is really going on in the background. We had to save the incoming boxes from merchandise, all coming from China, so overstock could be shipped back to Plano — they couldn’t even discount it fast enough. The specialty shop merchandise was made of such flimsy threads that they had to be laid out on flatbed tables – good luck being stored in the average closet. The toxic fumes coming off the Made in China Liz Claiborne leather handbags actually made the workers ill (until they were aired out for 48 hours).
    Their return policy last Xmas season set up a situation where more people were returning presents than keeping the purchases. Anyone who is considering in investing in this pipedream should spend time working in the stores and see the quality and cycle of goods for themselves.

    Well-loved. Like or Dislike: Thumb up 5 Thumb down 0

    9th November 2012 at 3:23 pm

  28. John A says:

    I shop/window shop at the JC Penny at my local mall all the time. Usually there are two or three more customers in the store than employees. Not a good sign. Maybe they will have to shutdown mall and store outlets and just sell online from huge warehouses. It’s really tough for retail businesses right now.

    Like or Dislike: Thumb up 2 Thumb down 0

    9th November 2012 at 4:10 pm

  29. IndenturedServant says:

    I’ve not been in a Penny’s store, (as they were known when I was a kid) for 15+ years I’d guess. If not for admin’s posts about them, I would have thought they were gone by now. I do not recall seeing a Penny’s store in quite some time but I’m typically doing seventy when I’m near a mall so I don’t notice.

    How long before Sears is gone admin? I’d imagine the only part of Sears that is still worth a shit is Craftsman. Still, I gave up on Sears & Craftsman years ago. I see Craftsman tools being sold at my local Ace hardware store. I can buy Snap-On, Mac, Thorsen and Craftsman tools at any pawn shop for pennies on the dollar. About 30 days after Christmas, all the latest and greatest tools start appearing in pawn shops as well! It would only take a week but the fucking govt drones legislate that all goods sold to pawn shops be held 30 days before selling.
    I_S

    Like or Dislike: Thumb up 3 Thumb down 0

    9th November 2012 at 5:22 pm

  30. JCP floating and spinning in the bowl says:

    We just rip up ads from JCP without looking, this guy doesn’t get it. Even in the heyday you didn’t drop into a department store 3 to 6 times a month. You get a feeling this is what he thinks. Maybe they should put grocery in like WallyMart, people go there ever week. The coupons are what reminded us to go, even if we skipped one, a birthday or some event would hit around one of these sales. It wasn’t a daily or weekly thing. There are still a lot of places in the world where you are expected to haggle over the price, anyone paying the 1st asking price is a fool. Coupons are the bastard brother to this, i.e. the buyers ego tells him he got the better part of the deal. who cares if it is true, the seller and buyer are both happy. Want to cut cost, stop mailing via of the Post Office people crap in the mail, want someone shopping there, bring back coupons via of email and code them to one use or one person use like Barnes and Noble does. A printer printed coupon can’t be used over and over with them. They constantly off 10-30-50 off via of coupon. Most likely the only thing keeping them in business.

    All the JCP changes sucks, wide aisles give the appearance of less merchandise, so does grouping crap by brand name and “gating” it, aka shops within a store. In Macy’s or the old JCP you could move about in a XXXX department, you fill in the XXX. Example you could move from pants to pants in the men’s dept checking prices and easily into another brand and find something. The second honcho in command of this mess, the one who ordered the aisles extra wide, because he once saw some dingbat women that couldn’t get her stroller thru some tight place, said in the women’s dept they are racking on special off set racks, pants on the bottom, matching tops offset higher up, within teach gated minishop . This explains the reduced merchandise in each of these mini stores as this eat space vs stacking piles and piles of stuff on tables the old way. Good old Ron also got rid of mutli JCP brands and put them under one, a JCP brand. Bad move dork, if you now dislike a JCP labelled product you hate them all. I used to buy St John’s Bay shoes ignoring other because I liked the fit on my fat wide feet of St John’s Bay. Slap a one label fits all I have no idea what the hell I am buying.

    I thought I read the new idea is to flood the store with mannequins, thousands shipping. I had to cut thru a JCP to get to the mall, standing at each check out in 3 different outfits were 3 mannequins with a large tag on each showing the bottom price, middle, upper price with the fair and square price writing written across it, how tacky. It was surreal, kind of like going into a graveyard where someone has placed dressed mannequins and place them on ever grave. The mannequins outnumbered the shopper’s in this store and seeing them was as creepy as it gets. I thought at first they were checking out. This was a week before Christmad on a weekend.

    Just got to add, I loathe this women.
    Here is a brand they seem so proud of getting Martha Stewart, now there is a brand I seek out, oh wait I can find her crap at Kmart. That is it, the new JCP it reminds me of Kmart. Maybe Kmart should change their name to KMT and hire Ron. Oh, Ron, nobody cares about silly Logo changes, gee, how many man hours when into that?

    Like or Dislike: Thumb up 2 Thumb down 0

    9th November 2012 at 6:03 pm

  31. thebrazenhubris says:

    I worked at “JCP” corporate for 3 years. I’ve never seen such an Obama-like management paradigm, long before the new CEO arrived.

    There are seemingly millions of square feet of meeting rooms, and they’re all full and spilling over into both cafeterias- a bunch of idiots talking all day about nothing, and completely removed from the reality of people actually doing work. You could fire thousands of them and it would have no effect, other than reducing the annoying intrusions on productive employees.

    My director would hold quarterly “town halls” where we were supposed to sit there for 4 hours while he says stuff like “judy did her job this month, come up and get an acrylic cube judy” while everyone applauds. I refused to go after the first one.

    There are giant posters everywhere for “african american” month, or “asian, slant-eyed” month, or “gay and lesbian” month, etc. etc, rather than seeing people as individuals- sickening.

    I once went into a store with my emp discount and 500 bucks wanting to spend it all, and I only found a couple of shirts I would even wear- had to walk out without spending anything. The “designers” or buyers think guys want to wear shirts with pterodactyles flying across the front.

    I identified a technical issue that was causing database failure related to redundancy that was going on before my arrival at the company, and isolated the cause- communicating this in unambiguous detail. Rather than being appreciative and working toward a solution, management banded together in political denial- rewarded me by blaming me behind the scenes (all verbally) for being the cause of the issue rather than correcting the issue. When I corrected all of them in writing- HR indicated that I needed improvement with my “emotional intelligence”. This type of thing went on until I was fired. I had a better position within a month working from home for more money.

    I always assumed this company would make money in spite of itself, but I hope I’m wrong.
    No one will be happier to see those commies crash and burn than I.

    Like or Dislike: Thumb up 3 Thumb down 1

    9th November 2012 at 1:12 pm

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