J.C. Penney is nearing its death: top retail strategist

Brian Sozzi

The Grim Reaper’s sickle is about to run roughshod at J.C. Penney (JCP), suggests one veteran retail analyst.

“For J.C. Penney, it’s too little too late unfortunately,” said SW Retail Advisors President Stacey Widlitz. “I anticipate a significant wave of store closures — it’s a tough one [J.C. Penney] to salvage.”

Hard to argue with Widlitz’s logic.

Mr,. Market says J.C. Penney is knocking on death’s door even if it miraculously has a good holiday shopping season. J.C. Penney’s stock is down 25% year-to-date, hovering around a mere 78 cents a share as of Friday. Nothing in J.C. Penney’s financials up to this point suggest a good holiday season is forthcoming.

Actually, the complete opposite.

J.C. Penney’s second quarter same-store sales crashed 9% as it continued to struggle with getting warm bodies into its stores (and online). The company lost $48 million in the quarter.

FILE- In this Nov. 24, 2017, file photo, a shopper heads into a J.C. Penney store in Seattle J.C. Penney Co. reports financial results on Friday, March 2, 2018. (AP Photo/Elaine Thompson, File)
Ashopper heads into a J.C. Penney store in Seattle. (AP Photo/Elaine Thompson, File)

So far this year, J.C. Penney has seen a free cash flow outflow of $133 million. The company has racked up $202 million in net losses over that same stretch.

Investors are still awaiting a clear turnaround plan from J.C. Penney CEO Jill Soltau, who took over in October 2018. Now coming up on her one year anniversary, the veteran retail executive has been assessing J.C. Penney’s store base and overall operations in an effort to save the retailer. Soltau has also been building out her executive team.

Part of that turnaround may reportedly include restructuring some $4 billion in debt coming due in the next few years.

Soltau at least knows she has a ton of work ahead of her to save the company.

“We must also earn the confidence of our investors and other key stakeholders, so that they know we are riding the business and generating returns,” Soltau told analysts in a mid-August earnings call.

But if Widlitz is right, Soltau’s efforts may be too little, too late.

Brian Sozzi is an editor-at-large and co-host of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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