Why Ackman hit the panic button - It's getting worse.
Ullman came back as the Home Store construction was finishing. He brought the old labels back. He opened the home store. He discounted. Advertised. Couponed. Apologized. What more can they do that they haven't already tried?
At the end of the first quarter, JCP reported this:
Cash and cash equivalents at the end of the first quarter of 2013 were $821 million, a decrease of $18 million over the same period last year. Total debt at the end of the quarter was $3.826 billion including $850 million outstanding on the revolving credit facility, long-term debt of $2.868 billion and capital leases and notes payable of $108 million. This is approximately $8 million more than previously reported on May 7, 2013.
Additionally, the Company entered into a commitment letter with Goldman Sachs Bank USA for a five-year $1.75 billion senior secured term loan facility expected to close during the second quarter.
So, 1.75 Billion plus $821 million equals: $2.571 Billion. They said they'll have $1.5 Billion at the end of this quarter. So all that effort and they lost $1 Billion this quarter? $425 million last quarter? Not only is this not turning around, the decline is ACCELERATING!
Numbers don't lie. At this pace, they have one quarter left and nothing to support a premise of a turnaround in the making. Just the opposite. It's getting worse which is why Ackman is hitting the panic button.
I don't gloat. I feel terrible for all those employed people. I do think there will be a JCP going forward but it will have to be re-structured with hundreds of store closings. That's a multi-year process and as someone who initially invested in a turnaround in the spring, I've just watched as things have gone from bad to worse. Yes, turnaround trades are sweet. This simply isn't one of those scenarios. You want to make money here? Short the pops. The greatest retail manage in history couldn't turn this now. That window of opportunity is gone
It takes a big man to admit he's wrong. I salute you, chase. I think a large part of the problem is that department stores have much more competition for consumers' dollars than they did twenty years ago. With consumer spending so stagnant, there's only so many consumer dollars to go around. Those dollars go to the stronger retailers. JCP is vulnerable because it allowed its stores to become stale. Only the strong survive in retail and JCP may one of those retailers who, like Woolworth, failed to evolve.
Thanks, Bettleruss. In my wildest imagination, I never thought they would lose over a billion this quarter. But once Ullman said $1.5 billion at the end of the quarter, I knew it was over and you guys had been right all along.
Yeah, and who sat there and watched all of that happen?? "THE BOARD" that is in place right now. I would be sending hostile emails and letters to news stations every hour until every single one of them step down or have a nervous breakdown. Only reason you hearing from Ackman is because he WANTS you to hear. All those other clipped winged weaklings haven't done anything to stop the carnage. Who wouldn't be P'd off at this point?