Boardroom Brawl At JC Penney: See This Metric

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Hard to avoid news of the ill will among directors of J.C. Penney (JCP), as hedge fund manager William Ackman, who’s on the board, demands yet another new CEO and his fellow director, in not so many words, ask Ackman to please shut up.

Ackman, of course (And has the guy ever run a business? Does running a hedge fund qualify one as a management genius?) thrust Apple Guy, also known as Ron Johnson, on the Penney board, and that led to plunging sales, estrangement among long-time customers, and other financial ills. Ackman is demanding a do-over as resident headhunter, it seems. Give the man credit for having abundant self esteem, if nothing else.

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JCP Revenue TTM Chart

Regardless of whether the board ignores Ackman and sticks with interim (and re-tread) CEO Myron Ullman, or caves into Ackman again and names one of his candidates, the number to watch at Penney, sadly, is cash and short-term investments.

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JCP Cash and ST Investments Chart

Yes, liquidity – before a merchandising turnaround, before new concepts – is paramount. Inventories are down roughly in step with sales. But missteps on inventory at this point could prove costly, with cash low and borrowing costs likely rising.

Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at editor@ycharts.com. You can also request a demonstration of YCharts Platinum.


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