JCPenney: Running out of cash.
The Wall Street Journal reports that the company hired bankers at Blackstone for advice on how it can bolster its cash pile. The report cites bond analysts who don't think the company will be able to generate enough cash to keep itself running beyond this year.
At the end of 2012, JCPenney had $930 million in cash and cash equivalents, according to an annual filing with the SEC. The year before, it had $1.5 billion — so it's basically losing half a billion a year in negative cashflow.
This cash crunch could severely limit what new CEO Mike Ullman can do. He has to do something to bring customers back to the store, whether waiting for Johnson's transition to boutiques to pay off, or returning to more heavy discounting.
Notably a cash crunch would limit the ability to offer big deals and advertise them or to continue Johnson's renovations.
Either way, the company looks like it will need to sell a minority stake or find a significant investor, sooner rather than later.
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