It is hard to imagine how the situation in JCPenney, once a retail power plant, could worsen.
The share fell almost 25% Thursday to a new all-time low below $2 a share according to recent gloomy results of the company.
JCPenney (JCP) continues to lose money. More than 100 shops have recently been closed. Turnover is falling. It has cut only its prospects for the year. And oh, yeah, there’s no CEO.
JCPenney is a clear example of a retailer that has not adapted to the industry’s Amazon ation.
While other large retailers like Walmart (WMT) and Best Buy (BBY) have invested heavily in the digital mode, to catch up with Amazon (AMZN), JCPenney — similar to the equally flutter Sears (SHLD) — is far behind.
JCPenney is now trying to reinvent itself as a retailer with a focus on women’s and children’s clothing. The company said they were among the Top sales performances in the quarter, along with jewelry and the mini-Sephora cosmetic stores In JCPenney locations.
But the transition was painful. Jeffrey Davis, JCPenney chief financial officer, said in a statement that the company’s stock building is faster than sales. The company had a lot of unsold goods on the shelves, because the company made bad purchase decisions.
America’s Top retailer in trouble
Davis said JCPenney has changed his strategy. It used to buy as much inventory as it needed to fill its stores. Now it will now hunt proven sales trends.
It’s not clear how much patience Wall Street still has. The falling share price is just the tip of the iceberg for the company’s titanic challenges.
JCPenney said on Thursday that it leave now only $182 million in cash, a more than 40% decline from a year ago. Although JCPenney stated that it had $ 2.2 billion of total liquidity, it also reported nearly $4 billion in long-term debt — until last year.
What’s more, JCPenney has no CEO. Marvin Ellison left early this year to take the top spot at Lowe (LOW).
JCPenney chairman Ronald Tysoe said in a statement that the search for a new CEO “running well” and that the Board “met with highly qualified candidates who have expressed a strong desire to be the next leader of JCPenney.”
Tysoe stressed that the appointment of a new CEO was the top priority of the Board of Directors.”
The truth about the retail Apocalypse
But the company cannot afford to step on the water looking for its next CEO. Consumers spend money thanks to tax cuts and a strong labour market and overall economy. Many other retailers-not just Amazon-benefit from this.
Walmart shares rose Thursday, after it reported strong results. Coach owner Tapestry (TPR) just posted solid profit too.
So JCPenney has to find a way to get people back into its stores. Fast. It won’t be easy.
“JCPenney has been in a break-in that I think has been irreversible,” said Forrester retail analyst Sucharita Kodali.
“This is like a film sequel, which had one too many versions. If you can’t make decent numbers in this large retail environment, what will you do in a downturn?”She added. “At this point, I think they are just trying to milk what they are from the brand. I don’t see any hope for a successful turnaround.”