J.C. Penney just reported their 2nd quarter results. Here is the two page bullshit press release filled with useless crap about their turnaround.
The good stuff is on page 2 of the press release. Meanwhile, the Wall Street shysters are already out in force applauding the “better than expected” results and pushing the stock up 5% in the pre-market trying to lure some muppets into buying this piece of shit retailer that is headed to retail heaven.
Here are the facts jack:
- Comparable store sales fell by 12%, after falling by 22% in the previous year. This is a feat that can’t be matched by even Kmart or Sears.
- They lost $586 million in just three months. Do you know how hard that is to do? They ONLY lost $147 million in the previous year. They’ve lost $934 million in six months versus $310 million in the previous year.
- They proclain that their cash position is $647 million higher than the previous year. Isn’t that precious. They happened to take out a $850 million short term loan in order to survive the quarter. There’s your cash.
- They burned through $708 million of cash in 3 months. They’ve burned through $1.46 billion of cash in 6 months. Wow. This stock is definitely a buy. Back up the truck.
- Their sales are 15% lower over the first six months of the year, but these bozos have increased their inventory by 5%. No wonder their gross margin has plunged by 27%, as they have to slash prices to clear the crap they are selling.
- Their balance sheet is a case study in how to go bankrupt in three easy lessons:
- They have increased their long-term debt by $1.1 billion in the last 12 months.
- They have increased their short-term debt by $850 million in the last 12 months.
- They have decreased their equity position by $1.35 billion in the last 12 months.
- Their debt to equity ratio is 2 to 1.
- They have a pension obligation in excess of $500 million.
- This company is burning through their cash at a rate of $8 million PER DAY with no end in sight for a reversal.
This is a dead retailer walking as we go further into recession. At their burn rate, they will run out of cash in 2 to 3 quarters. It will end before that when their suppliers no longer are willing to finance their inventory. But, CNBC and the Wall Street morons will declare this as the bottom for the 10th time in the last three years. The bottom will be with the Chapter 11 announcement in the not too distant future.
Coming to a Mall near you.