Boston, MA 02/24/2014 (wallstreetpr) – J.C. Penney Company, Inc. (NYSE:JCP) is a company on a ledge, as it continues to grapple with increasing challenges and uncertainty in the market. It is currently rated as a “Sale”, by a majority of research firms as it continues to show significant weaknesses in its key operational sectors. Its liquidity position is at its worst with the company’s cash dwindling faster than earlier anticipated.
A lot is a miss in J.C. Penney Company, Inc. (NYSE:JCP) and the trend is worrying with institutional investors Hotchkis &Wiley, Dodge &Cox and Hayman Capital opting to pull out before things get messier than they already are. At the current pace the company looks set to run out of cash within a few quarters. The company should start considering ways of raising additional capital as it is expected to burn a total of $1.2 billion as of Q3 F2015.
The current pace that the company cash is dwindling ultimately calls for a liquidity fusion of about $500-$700 million as the company tries to find its way with the expected 3% growth in comparable store growth. J.C. Penney Company, Inc. (NYSE:JCP)’s third quarter financial results marked the third consecutive quarter that the company has gone without recording any positives on its EBITDA. It is only in October last year that the company posted a consecutive EBITDA loss of $218 million
Possible solutions to JCP current problems
Analysts at Wall Street expect J.C. Penney Company, Inc. (NYSE:JCP) to burn a total of $2.7 billion for the current fiscal year at the back of net losses amounting to $1.8 billion with capita expenses of $990 million. Some of the ways the JCP can improve its liquidity levels involve raising $500 million through a long term loan or selling some of its peripheral assets such as its 240 acres of real estate. A last resort measure in this case would be the issuing additional equity to the market.
J.C. Penney Company, Inc. (NYSE:JCP) sales need to jump by highs of 25% compared to F2013 for the company to come back to favorable operational conditions with gross profits margins maintaining 36%-37% levels. This changes need to occur sooner than later taking into considerations the headwinds being experienced in the retail industries.
J.C. Penney Company, Inc. (NYSE:JCP) is expected to report its fourth quarter result for 2014 fiscal year at the close of the bell on February 26, 2014 with analysts at Thomson Reuters anticipating a net loss of $0.82 a share at the back of sales worth $3.86.
