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
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…
