Everybody knows the pain of JCPenney (JCP), with its 54% declines in 2013.
The flop of JCP stock in the wake of Ron Johnson’s ill-advised reformulation of the stodgy department store has been a thing to behold … as has the rather awkward about-face that followed, with the installment of Mike Ullman again as CEO despite the fact he presided over some pretty disappointing years of declines at JCP.
But this isn’t just a story of musical chairs in the C-suite. This is a story about numbers that don’t add up.
Consider the nearly $5 billion in long-term debt — twice JCP’s market capitalization and roughly the same amount of total assets the company holds.
Consider JCP is about to close out its third unprofitable year in a row, with not a single quarter projected to be in the black next year.
Consider the debt scare a few months ago that showed serious liquidity concerns.
Forget what you think about the brand or the management. The bottom line is the bottom line. From fiscal 2012 to 2013, sales plummeted 25% … and in the current fiscal year they are forecast to drop another 7% to 10%.
Bleeding cash, huge debt and falling sales … that’s the blueprint for a stock that is in deep trouble in 2014.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.