JC PENNEY LOSES ANOTHER $167 MILLION – WALL STREET CHEERS

Yippee!!! JC Penney ONLY lost $167 million in the first quarter. The Wall Street shysters are ecstatic because they BEAT expectations. Buy Buy Buy.

This loss now brings JC Penney’s cumulative loss since 2011 to, drum roll please, $3.5 BILLION. They haven’t had a profitable quarter in over four years. But, they are always on the verge of that turnaround just over the horizon.

Wall Street has told you to buy this stock from $42 in 2012 to it’s current pitiful level of $9. They tout the wonderful 3.4% increase in comparable sales. They fail to mention that first quarter 2016 sales are only 30% below first quarter sales in 2011.

They fail to mention that JC Penney burned through another $274 million of cash in the first quarter. Their equity has dropped by $1 billion in the last year, while their long term debt has gone up by $500 million.

In 2011 they had $5.5 billion of equity and $3.1 billion of debt. Today they have $1.8 billion of equity and $5.3 billion of debt. They are dead retailer walking. The only reason they haven’t gone belly up is the Federal Reserve manipulated ultra low interest rates that encourage mal-investment and keep zombie companies like JC Penney alive.

Being able to borrow at low rates will delay the end, but the end is still coming for this bloated dying pig of a company. The future is certain.

But don’t listen to me. Listen to Wall Street. This is the buy of a lifetime.

 

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Stephanie Shepard

“The Wall Street shysters are ecstatic because they BEAT expectations.”

No they didn’t. As a business I expect them to make a profit.

Stephanie Shepard

I’m aware hence my snarky comment. But in all seriousness why do they even bother to say they beat expectations anymore. For the past few years as companies crumble they always say they beat expectations. Scrapping the bottome f the barrel I suppose because rational business expectations are to continue to make a profit and not go bankrupt.

Westcoaster
Westcoaster

Steph, when you’re a publicly-traded company making a profit is an option. It’s fantasyland, which is why small mom & pop businesses are the backbone of the real economy, cause on Main St. if you don’t make a profit, you don’t survive. I’m sure you already know this 😉

Stephanie Shepard

WC- I do, but the madness of it is really astounding at times.

llpoh
llpoh

Companies – big ones anyway – can survive a very, very, VERY long time without making a profit.

What they cannot survive is negative cashflow.

For instance, it is entirely possible for a company to be “losing” money but actually have positive, perhaps enormously positive, cashflow.

The easiest way to see that this is possible is via depreciation. For instance, there are companies that have vast capital improvements that get depreciated x% a year. This $x amount gets deducted as an expense each year. If the amount is large enough, it can create a situation where the company is cashflow positive yet is losing money.

For instance, say a company has sales of $100, and expenses of $80 not including depreciation. Depreciation is $25. So the company is generating $20 in cash (100-80), but is booking a loss of $5 in this example (100-80-25).

It is one of the reasons airlines, in particular, can survive for very long times while losing money.

I do not know what JC’s situation is, but it is likely that a lot of the loss is being generated by depreciation. The cashflow position could well be significantly different.

Admin could likely tell us a lot more re that.

Jackson
Jackson

JFC, if I ran Pennys, I’d run, then claw hand over foot, to set up an Amazon type operation.
That’s the future for retailing.
Figure it out.

Big online retailers, like Amazon, and like Pennys could be, can carry far more inventory at far less overhead than their brick and mortar store counterparts.
Also, in terms of time and money, it’s much cheaper for me and the average Jane or Joe to shop on line. Click, click, click and you’ve seen all the selections and, with another click what you bought is on the way. It takes less time than getting dressed and starting the car. Usually the online price beats local shopping which is a treat. Also, you spend no money on gas or auto wear and tear by shopping online. Gratification is delayed, that’s true, but depending on how much you’re panting for what you want, satisfaction doesn’t have to be postponed more than a day or two.

For me it’s click on the Amazon ad on TBP then buy online and enjoy the thrill of more mail or a package on the doorstep. Oh, and I feel good about Amazon dropping a few pennies in Jimbo’s piggy bank so he can keep posting articles for me to comment on.

TE
TE

@Llpoh, that is only positive IF, and this in our modern age of Executive/Board pirates stripping everything bare, IF the company is not leveraged to the hilt with loans that require covenants. Have you ever seen a business loan without covenants?

These covenants would demand either total, instant, repayment, or increased interest rates.

While the band plays on, like today, the corporation just pays more interest.

When the market drops and the reality in the price of commercial/retail property reverts to mean (and truly, in a country with few real jobs, our commercial property is VASTLY overvalued right now), the banks are going to start yanking these notes.

Which is EXACTLY what happened last time.

Here is the difference, in ’08 the Federal Reserve and the Treasury embarked on a few trillion ways to keep this balloon inflated.

What will they do this time?

Look out below. The reality of little production, little true income and lots of mandated bullshit expenses is going to hit retail hard, and first.

I was biting my tongue listening to my brothers in law talk about how valuable their new Apple stocks are going to be.

This is going to end spectacularly.

And, no worries about the JCP, their crap website is going to start selling Sephora items, so just like their “Home Stores,” all is freaking great. Yep, profits and shiny new Benz’s for all.

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