I find J.C. Penney to be a sick joke. The executives of this company think they can put out positive press releases and have their financial statements not properly show in the earnings press release to cover up the fact their financial results are deteriorating – not improving. CNBC will dutifully report the corporate lies. Checkout the press release where, for some reason, the financial results don’t format. Must be a glitch. Right?
The press release heading makes you think business is booming. Whenever a corporation crows about EBITDA, you know they are covering up their true results. Of course, a company with $4.7 billion of debt wouldn’t want to include interest expense in the results they announce.
These rocket scientists owe their ongoing existence to Bernanke and Yellen. A company with this much debt and billions in losses over the last five years should be paying 20% interest on their debt. Instead they can finance themselves at 8% rates. This bloated pig should have gone belly up by now. That’s how creative destruction works in a free market. Their existence as a dead retailer walking brings down the results of other retailers, creating the current zombie retail environment. These retailers just plod along, losing money, buying back stock, and never dying. The Fed has created this Walking Dead Economy with their warped QE and ZIRP “solutions”.
If you go to JC Penney’s website, you can actually see their income statement, balance sheet and cash flow statement.
http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-newsArticle&ID=2168214
It seems the actual results are in complete opposition to the feel good press release put out by the feckless management of this carcass of a company. Here is a little truthiness about J.C. Penney’s real results:
- Sales declined by 1.6% and comp store sales declined by 0.4%. Last year comp store sales rose by 3.4%. Does that sound like improvement?
- Gross margin declined by $23 million, but they fired thousands of people, reducing operating expenses by $93 million. Slashing prices and firing employees really sounds like a turnaround.
- It seems their crowing about EBITDA might be a little overdone. They continue to lose gobs of dough. Their loss for the quarter was $68 million.
- The real disaster will not be discussed by the brain surgeons running this poor excuse for a retailer. They burned through $394 million of cash in the first quarter, 74% higher than last year’s burn. They only have $415 million of cash left.
- Good management does not increase inventory by 4% when sales are falling by almost 2%.
- Another $525 million of equity was evaporated in the last year.
- I bet they wish they hadn’t bought back those hundreds of millions in shares at prices 3 or 4 times higher than the current price. Other retail CEO’s should take note, but they won’t. Their golden parachutes will protect them. Screw the shareholders.
To give you some perspective on how great J.C. Penney is performing, let’s compare their first quarter results to their 2007 first quarter results.
2007 1st Qtr Sales – $4.4 billion
2016 1st Qtr Sales – $2.8 billion
2007 1st Qtr Income – $238 million
2016 1st Qtr Income – ($68 million)
J.C. Penney sales have fallen by 36% since 2007. They have lost billions over this time frame. They have four times as much debt as they do equity. They have $2.5 billion of current liabilities and only $400 million of cash to pay off those liabilities. But, the bozo management thinks going into the low margin appliance business is going to save this sinking ship. Sorry bozo. You are going bankrupt. It’s just a matter of time.
Too bad for JC Penney. Looks like malls and flagship department
stores will give way to nail salons and tattoo parlors and what else?
The malls in my former area were beset with blacks knocking into
people and shoplifting like mad. It was a real battle. Last time I
visited the city, I stopped there for one thing. It was quite peaceful.
Old ladies shopping the bargain racks, and more sales people than
customers. 50% of the sales staff were Russian. I should say, former
USSR countries that are now “free” to work in the FUSA.
It has been a long slow dying process for this once great retailer.
In times long past,JC Penney offered decent quality goods at a fair price. They are victims of their own greed. They have been part of the corporate plan to gut and outsource America for short term profit. They deserve what they are getting. As a whole we all deserve what is coming. We bought into to this crap.
Same goes for Sears………
My eldest sibling worked in corporate JC Penny for the last 30 years. I think I know exactly what happened there.
She trained a young man from Pakistan to perform her job and then took an early retirement. Which gave her plenty of time to try and stick her big fat nose into my business. After it got bruised and bloodied, she’s learned that we don’t care for corporate types ’round here and we picked up some pretty good self-defense skills while in the military.
When I include a comment about my personal life or situation, it is only because I find it interesting how things in our own lives can explain or mirror things we see in larger society. I really don’t think this is unique to my own experience, but I have paid close attention to such things during my adult life. I’ve noticed that organizations take on a personality that varies according to the personality types of those in leadership positions. In a very structured organization, like a military unit, that personality change can occur very quickly, with an egotistical maniacal commander replaced by a more confidence-inspiring leader bringing almost a sigh of relief to soldiers forced by law and oath to obey that person’s orders simply by virtue of rank and position.
In a more loosely structured organization that you find in a corporate office building housing the company President and Executive Officers along with thousands of corporate associates running their various departments, the personality changes may take longer to dissolve into the atmosphere. In the 1990s there was a shift in marketing strategy at JC Penny I remember my sibling talking about that seemed, to me, to not make any sense. When I told her so, she got very upset with me and since I really didn’t give a shit if her company sold more towels or sheets than Sears, I shut up. But, within ten years I was proven right and I think the first tension in our relationship began during that discussion when I challenged her authority on the marketing strategy of JC Penny. Is kind of funny that the complete breakup of the company is right in line with her retirement.
A third more odious type or organization resists personality change completely. That is bureaucracy. And it can be government bureaucracy OR Union-hall bureaucracy. Both types of organizations tend to promote mediocrity and an almost self-loathing among employees. And all the managers tend to be in their positions due to cronyism and so lack the competence to effect any lasting change anyway.
Well, I really need to get the place ready for my son’s arrival from college before he heads off for his summer internship.
When hyperinflation finally hits from printing tens of trillions for welfare/warfare waste, so goes Welfaremart after the Giant Riot Holiday.
JC Penny is like a bad smell that won’t go away.
Just die already!
JC Penny, Sears, Kame-A-Part, Kohls, Herberger – right on the edge of the Event Horizon!
If you people would get off your ass and spent some money ……then you could save the big box stores.No more excuses. Go spend money.It’s your patriotic duty.
If Trader Joe’s bought JC Penny for the extra floor space I’d be glad.
If JCP fell into a crack in the Earth tomorrow would any shopper notice ? No !
Perhaps a turn-around plan based on selling items not universally available elsewhere might fly – stop being the 15th store in a 25 store market.
i worked there for 2 years in the “new” jcp. it was comical. i was a ex walmart hot shot mgr lookn for a challenge… well jcp is like a helpless fable old lady. you feel sorry but its her time past. anybody can see 2 minus 2 = zero not 4. jcp was always tragically square and never cool and thats why it failed. the johnson “apple look” was a good try in looks dept but a a lost cause.