PLANO WE HAVE A PROBLEMO – JC PENNEY ENTERING RETAIL GRAVEYARD

10 comments

Posted on 9th August 2013 by Administrator in Economy |Politics |Social Issues

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The JC Penney farce is approaching its tragic ending. They will be joining Montgomery Ward and hundreds of other defunct retailers in the relatively near future. I predicted this the day they hired Ron Johnson. One year ago they reported 2nd quarter results that were absolutely horrific. The Wall Street assholes cheered. The stock soared that day. The retards who call themselves investment analysts drove the stock from $20 to $30 within a month. Their thesis was that it couldn’t get worse. As usual they were wrong. The stock traded at a 13 year low today, down 60% since the Wall Street crowd said buy last Sept.

The new CEO, who was the old CEO, is now going to be the ex-CEO again. They have no top management in place. The stores are a mess. Their suppliers won’t supply without COD. They are burning through millions in cash every day. Their balance sheet is a disaster. Last year their 2nd quarter same store sales were NEGATIVE 22%. That is almost impossible to accomplish. They report earnings on the 20th. I’ve seen estimates that same store sales have fallen another 16%. OMG!!! This is a death spiral.

The new CEO should have experience with liquidation plans. JC Penney will be filing bankruptcy. They will be closing hundreds, if not all of their stores. No one will notice. Sears and Kmart will follow. The long emergency methodically rolls on. Luckily, all those vacant rotting store fronts won’t result in the Too Big To Trust Wall Street banks writing off the loans to mall developers. The landlords will pretend they are getting rent and the banks will pretend the loan payments are being made. Accounting is awesome.

From JCPanic To JCPandemonium

Tyler Durden's picture

Submitted by Tyler Durden on 08/09/2013 11:18 -0400

While outlining the ridiculous spectacle of the last 24 hours news flow on JCPenney is useful for some, a step back to view this charade for what it is – a hedge fund manager massivley under-water, a company careening into bankruptcy, a board desperate to show it has any relevance, and a most senior creditor (Goldman Sachs) chomping at the bit to securitize the firm’s T-Shirts and small appliances… the entire ‘bounce’ from yesterday has been retraced as Ackman and JCP’s board fling insults at each other… JCPanic has been downgraded to JCPandemonium… on its way to JCPoof…

First this…

  • *ACKMAN TELLS JCP NEW CEO SHOULD BE IN PLACE 30-45 DAYS:CNBC
  • *QUESTROM TO CNBC: JCP BOARD ‘DOESN’T HAVE A SENSE OF URGENCY’

Then this…

  • *J. C. PENNEY CO SAYS BOARD DISAGREES WITH ACKMAN        :JCP US
  • *JCPENNEY CHAIRMAN: ULLMAN RIGHT PERSON TO REBUILD COMPANY

and now this…

  • *ACKMAN:JCP BOARD HAS CEASED TO FUNCTION EFFECTIVELY RECENT WKS

 

 

Bear in mind that credit markets throughout all of this have been serially unimpressed… 5Y CDS now at new record highs 1232bps (equivalent running)  or ~70% probability of default…

 

10 Comments
  1. harry p. says:

    there balance sheet, business plan and same store sales sounds like something run by the monkeys in the District of Criminals

    note: no offense to real monkeys and other primates was intended

    9th August 2013 at 2:16 pm

  2. Oirfideach says:

    Their.

    9th August 2013 at 2:53 pm

  3. JJ3 says:

    Prime 8′s.

    9th August 2013 at 3:12 pm

  4. Wyoming Mike says:

    I call bullshit!!! I thought there they’re their brilliant scheme of eliminating having sales saved them a couple years ago. No?

    9th August 2013 at 3:13 pm

  5. Persnickety says:

    Meh.

    9th August 2013 at 3:34 pm

  6. Administrator says:

    Ackman warns J.C. Penney’s condition is ‘critical’, calls for new chairman

    August 9, 2013, 12:40 PM

    By Andria Cheng

    The drama surrounding J.C. Penney Co.’s JCP public spat with its largest shareholder Bill Ackman intensified on Friday.

    Ackman sent an open letter to the Penney board — his second letter in as many days — publicly criticizing the board and chief executive as he seeks the ouster of Chairman Thomas Engibous.

    “I have lost confidence in our Chairman’s ability to oversee this board,” Ackman said, calling for an immediate board meeting. “Penney is at a very critical stage in its history and its very existence is at risk. In recent weeks, our board has ceased to function effectively.”

    Ackman also criticized returning CEO Mike Ullman for making major hires and changes without properly consulting the board, including the recent hiring of former Kraft Foods executive Debra Berman as its marketing chief. He also said Ullman terminated consulting firm Alix Partners and cut off Blackstone from access to information and, as chairman of the finance committee, said he didn’t have access to information. He also said Ullman was hired by the board as “interim” CEO, but has behaved instead like a permanent one.

    J.C. Penney representatives didn’t respond to a request seeking comment.

    The drama only fueled the fire engulfing the struggling chain. Penney shares fell 7%, making it again the S&P’s biggest decliner.

    On Thursday, Ackman, whose Pershing Square Capital Management holds an 18% stake in Penney, sent a letter to Penney’s board, criticizing the board for not speeding up a search for a CEO to replace Ullman who returned in April to replace Ron Johnson, whom Ackman helped to hire and whose overhaul led to a $4.3 billion in sales drop alone last year and severely depleted cash coffers.

    Ackman said the company’s former CEO Allen Questrom, who had turned around Penney in early 2000s, would return as chairman under the right conditions. Chairman Engibous fired back at Ackman in support of Ullman. He said the board has begun a CEO search in earnest three weeks ago and also called Ackman’s actions “disruptive.”

    “This overnight spat is totally unacceptable,” said Columbia Business School professor Mark Cohen, former CEO of Sears SHLD Canada, in an interview. “This has to be solved in a closed board room. The notion that the appointment of individual human beings or a team that will somehow magically fix this mess is just not realistic. This company is in terrible trouble. It’s not entirely possible it can be fixed.”

    Credit Suisse analyst Mike Exstein said Penney’s issues transcend personalities.

    “There’s no positive spin to be placed on this,” said Exstein, who already rates the stock underperform. “The overwhelming issues for JCP at this point remain the content within the stores and the appropriateness of the merchandise for the customer, rather than Ullman’s progress to date. Given the short tenure of Mike Ullman’s leadership thus far, he can’t be expected to have affected the content at this point. JCP is at a crucial stage in trying to affect a turnaround. Any interference with this is counterproductive.”

    Analysts expect Penney still has enough financing to last it until next year, but they said if sales continue to decline, it will have little chance of survival.

    “Time is of the essence,” said Citigroup analyst Deborah Weinswig, who recently cut the stock to sell. She said if Penney was to convince former merchandising chief Ken Hicks, now CEO at Foot Locker Inc. FL , to return, her sell rating could be at risk.

    More than 10 senior-level executives have left Penney since Johnson left in April, she said.

    – Andria Cheng

    9th August 2013 at 4:07 pm

  7. bb says:

    Damn , Kmart and Sears…..well thank God for Walmart.

    9th August 2013 at 5:00 pm

  8. Spinalator says:

    I heard Jesus was actually an accountant…That explains all the miracles.

    9th August 2013 at 6:20 pm

  9. Spinalator says:

    Shit…i wish i had studied accounting. I always wanted to learn how to levitate.

    9th August 2013 at 6:23 pm

  10. Chicago999444 says:

    I’m surprised places like Penny’s and Sears are even still breathing, and if I hadn’t heard about it on this site, I wouldn’t know that K-Mart was even still around.

    There is nothing in those places that you can’t find better, somewhere else for less money. I have only set foot in a Penny’s store once in my life, because I’d just exited my workplace nearby and it was 2 degrees below zero outside and I’d just lost my gloves and needed a pair that minute. I haven’t been in a Sears store since I went into one shopping for a washer and a flashlight, and found a dirty, unattractive store with disheveled tool department, and an appliance salesman who couldn’t tell me whether the one I was viewing ran on 120v or needed 220v.

    The bald fact is that this country is seriously “overstored”. In 1964, during an era I remember as having a vast array of shopping venues already, there was an average of 4 sq feet of retail space per customer in this country. As of year 2000, there were 38 sq ft of retail space per customer. Since the 70s, when specialty stores and boutiques and shopping malls began to proliferate like weeds in every city and suburb in the country, I have wondered who in the hell keeps them in business, because it wasn’t women like me making the market for little cotton skirts that cost $250 and $100/pair sunglasses or stuffed toys from Build-A-Bear.

    It turns out that the consumers were not the people supporting all these places, at least not voluntarily. It turns out that these stores have been heavily dependent upon the local taxpayers and that a regional shopping mall or Big Barn store like Target, Walmart, Home Depot et al, does not get built without a hefty gift from the taxpayers through TIF districts, tax abatements, and other tax-funded gimmes like a highway built at the behest of Walmart, who will not build a store without extorting a gift of at least $5 M from the municipality in which it is built, unless it is one of the little Walmart “markets” selling only groceries that are now appearing in high-density urban neighborhoods. If you are a suburbanite who is now being destroyed by property taxes that have tripled or even quadrupled since you bought your house 10 years ago, look no further than all the shopping malls and big box stores not far from your house, that your local authorities bent over for and bankrupted your town to attract because they wanted “economic development” and to build a “tax base”. How you build a tax base with businesses who had to be bribed $5 M to ??? to build in your town and who pick up and move to the next sucker town the minute the abatement expires, is not clear to me, and apparently is obscure to the municipal politicians who scratch their heads wondering why the taxes these places are supposed to generate never materialize and what are they going to do with all the empty, blighted shopping malls and power centers these companies leave behind.

    10th August 2013 at 1:44 am

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