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J. C. Penney Company, Inc. Message Board

  • meifud meifud Sep 29, 2013 2:48 PM Flag

    motley fool says time is running out, and jcp no longer worth the gamble

     

    Time is running out
    J.C. Penney raising cash to such a dilutive degree is a huge red flag. This seems to be a last-gasp effort to finance a turnaround that has yet to materialize. J.C. Penney is entering the absolutely critical holiday shopping season. This may very well be the last opportunity for J.C. Penney to get shoppers back in its stores and resuscitate itself. Should the company whiff on the holiday shopping season, as it already did for the back-to-school season, then the company may find itself out of options.

    The company is burning cash to such an alarming extent that further capital raises will be extremely difficult if the company can't even prove it can succeed in what are basically gimme-shopping seasons for clothing retailers. The doors of the capital markets are quickly closing. I don't see how J.C. Penney would be able to access the bond markets again, unless its debt offerings were highly secured (by, say, the company's real estate assets). But, the terms would most likely make such an arrangement unfeasible. Consider that earlier this year, Standard and Poor's downgraded J.C. Penney's credit rating to CCC+. To be clear, this is now well into junk territory.

    As a result, there's simply no need for investors to gamble on J.C. Penney, as the company's very existence as a going concern should now be called into question.

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