JCPenny has been struggling…really struggling.  JCPenney shares are down over 20% this morning in the pre-market…

…trading below $2 for the first time in its almost 40 year history and default risk that is soaring.

JC Penney is now a Penny Stock.  Let that sink in. 

Most of us grew up in a JC Penneys or ordered from their catalogs; with back to school shopping or Christmas Shopping being a large part of it.  But, JCPenney is in trouble.

Earlier this year, JCPenney announced it will cut 360 jobs at its stores and corporate headquarters. That’s on top of more than 5,000 layoffs in 2017, after JCPenney decided to close nearly 140 stores. It has about 860 left.

The company has about $7.5 billion in total debt if you take total liabilities minus cash minus receivables. JCPenney calculates outstanding long-term debt to be about $4.06 Billions.  The problem, according to Forbes, is that their business strategy is flawed.  With very high debt, expanding into appliances that have a low margin of return, an online sales lag, and fierce competition it is doubtful that JCPenny is going to be able to turn things around.  JCPenney appears to be running out of both cash and time to fix things.  

JCPenney finished the quarter with just $181 million in cash, down from $363 million a year ago. Much of the big decrease was because of a $190 billion debt repayment.  But JCPenney is adding even more debt.

All of this coupled with the fact that there is no one at the helm since their CEO Marvin Ellison jumped ship to go work for Lowe’s and things are looking pretty grim for the long time store founded back in 1902.

Floating Vimeo Video