Struggling retailer J.C. Penney (NYSE:JCP) found itself a new CEO, and the market celebrated the news. But, I don’t think this is a rally investors want to chase. JCP’s problems extend far beyond management. They primarily relate to the fact that JCP is no longer relevant in today’s competitive retail world. A new CEO won’t change that. As such, despite the positive reaction from Wall Street, this news doesn’t make JCP stock a buy.

Specifically, after the market closed on Tuesday, Oct. 2, JCP named Jill Soltau as the company’s new CEO. As a 30-year retail veteran with a plethora of leadership experience, Soltau was widely celebrated by investors and analysts alike as a winning pick. In response to the news, the JCP stock price rose as much as 10%.

But, this news isn’t the game-changer that bulls are hoping for. Soltau projects to be a completely competent CEO who will do a great job. But, even if she did a perfect job, that wouldn’t change the narrative for JCP.

At this point, the outcome for JCPenney stock is inevitable. The company has already lost its relevance among consumers, and once that happens in today’s retail world, it is nearly impossible to regain. Plus, the number of things management can do to improve e-commerce capabilities, store presentations or product assortment is limited by the debt-loaded balance sheet and already depressed cash flow.

Overall, a new CEO doesn’t change much for JCP stock. This company’s problems are far too big and run far too deep to be fixed by a CEO change. As such, any rally in the JCP stock price related to a Soltau’s appointment will likely be short-circuited.

JCP Is Getting Squeezed Out of Retail

When it comes to JCP, the big idea here is that the company is getting squeezed out of the retail game.

Quite simply, the rise of e-commerce brought with it multiple new e-retailers. But, the whole retail sales pie in the U.S. didn’t increase by all that much. Thus, demand from consumers (number of retail sales in the U.S.) remained constant, while supply from retailers (number of physical and digital retail stores) went up by a bunch. Steady demand amid a big supply increase meant that, statistically speaking, the number of sales each supplier/retailer could support went down.

Worse yet, many of those e-retailers began to dominate the retail scene. Think Amazon (NASDAQ:AMZN), Wayfair (NYSE:W) and Etsy (NASDAQ:ETSY), to name a few. From a supply-demand standpoint, these new entrants can only dominate if other traditional players lose huge market share. Indeed, that is what happened. As Amazon, Wayfair and Etsy rose to dominance, multiple other traditional retailers declared bankruptcy and/or shrunk by a whole bunch.

JCPenney is one of those retailers. How did JCP find itself in this situation? Because the department store was unable to differentiate itself as the retail game became more crowded than ever over the past five years. As consumers were given more options regarding where to shop, they quickly left JCP stores because the value proposition was never all that strong to begin with.

A new CEO won’t change this, despite JCPenney stock owner’s hopes. Perhaps Soltau can help improve JCP’s e-commerce platform. Perhaps she can improve omni-channel commerce capabilities. And, perhaps she can even improve store presentations and product assortment to be more relevant. But, even the sum of these moves won’t save JCP stock. In order to save the company, customers need to come back in droves. But, they’ve already left to go shop at other department stores and Amazon.

Getting them back is a tall order, and it will take a long time. That is time JCP stock doesn’t have, mostly because of the ticking time bomb on its balance sheet.

The Balance Sheet Is A Big Problem

The real reason stock in JCPenney is doomed is because of the balance sheet.

Given infinite time and infinite resources, any retailer can re-invent itself to be a sustainable and profitable operation. But, JCP doesn’t have infinite time or infinite resources. If anything, its time and resources are very limited.

JCP is sitting on essentially $4 billion in debt on its balance sheet, and produced just under $60 million in free cash flow last year. Thus, the amount of time JCP has is limited by the huge debt-load, while the amount of resources the company has is limited by the already anemic cash flow.

Without big resources and tons of time, JCP stock looks doomed to fail, regardless of who is in charge. That is especially true considering many of JCP’s competitors don’t have such a large a debt problem, and produce much, much more cash flow.

Bottom Line on JCP Stock

Regardless of who is in charge, JCPenney stock is doomed because the company is rapidly losing relevance in a crowded and competitive retail marketplace, and JCPenney doesn’t have the time or resources to fix that long-running problem.

As of this writing, Luke Lango was long AMZN.