Come on... Reorganization is the writing on the wall. Really?
Too much debt, gravitationally handicapped sales, burning through cash like kindling... No rational "investor" is playing the long here. Long put options are the money maker here besides the occasional swing trades. Why all the fakers of the funk?
I'm very rational and I'm very long. Here's where the analysts sat before the numbers:
Eight equities research analysts have rated the stock with a sell rating, fourteen have given a hold rating and five have assigned a buy rating to the company's stock. The company presently has an average rating of "Hold" and a consensus target price of $15.45.
The numbers yesterday proved one thing, only. The company is not losing nearly as much money as many predicted. The Homegoods section, which is spectacular, was completely absent from the quarter, the whole section is under tarps. It accounted for as much as 20% of revenue in the past. The coupons have been working and that's just beginning. The "new" shopper JCP sought under RJ is finding the store. The old customer is being mollified with a return of the ancient brands in small quantities. All of this means a lot less cash burn going forward and certain profitability in Q4.
Honestly, reorganization isn't even close to being on the table, now. Had they burned through $1.5, then maybe but the numbers along with the other efforts mentioned above will cut the cash burn in Q2, at least in half, which means a looooopnnnnnggggg runway to get this right.
If the store is a hit, as I predict it is, shorts are really going to be in real big trouble here. There's no worry for longs, the stock will not go much lower from here. They have the money to lose $300 million a quarter for a couple of years and that's what it will be, at worst, next quarter.
Sorry chase I just don't see it at this time. There is no nominal indicator dropping sales have bottomed. Thats spells doom for JCP in it's current position. I'm actually impressed they have held out filing this long. Getting into bed with GS for all remaining assets... Summer sales are traditionally slow, no xmas shoppers to shore up sales numbers. The home idea is terrible, crowded space competitively, low margin business. The cash burn will only accelerate. Sorry but Soros is reading the American consumer barometer wrong on this one. The much coveted tween, teen, 20 somethings and apparel buyers just don't shop JCP. Doesn't look like that will change anytime soon. I'm long puts.