JC Penney (JCP): Outlook Dim even with New CEO

10:14 10/09/2018

While retailers have been hit hard in recent years, JC Penney’s (JCP) riches to rags story is one of the most severe. Now down 95% over the last 10 years, it’s a mere shell of its former self.

And while there’s new CEO at the helm, it may not be enough to help.

"They're in a leaky boat that eventually will sink," Mark Cohen, the director of retail studies at the Columbia Business School, as quoted by CNN.

"The prognosis for the future is not happiness."

After two CEO failures, the company has now hired JoAnn Stores’ CEO, Jill Soltau – the first woman to hold this role at the company, believe it or not. Considering that 70% of JCP customers are women, you’d think they would have done this a long time ago.

Failing to bring in a female CEO a long-time ago is another sign of poor decisions.

Can a New JC Penney CEO Help?

Under her leadership, “JoAnn Stores has undergone a revitalization of branding, expanded digital and omnichannel capabilities and forged strategic partnerships to build meaningful relationships with its customers,” notes JC Penney.

While no one is doubting we she can bring to the table, the damage is done.

She clearly has a tough job ahead of her.

Not only is JCP operating at a loss, it also billions of dollars in debt that has to be serviced. In the first six months of fiscal 2018, the company finished its second quarter with $182 million in cash and cash equivalents. That stands against $3.96 billion in long-term debt.

Worse, it had negative free cash flow of $235 million.

Plus, with a revolving door of CEOs, we can see a patterns of poor management, and signs of a sinking ship. On top of that, e-tailers dominate retail at the moment, like Amazon.com.

It’s a tough road ahead for the new CEO.

Something has to change under her leadership. At current pace, JCP will not survive.

Making things a bit worse, the company no longer has a CFO. Jeffrey Davis, the company's chief financial officer, was resigning 14 months after taking the job.

At this point, the writing may be on the wall. Even with a new CEO, JCP has lost its relevance among many consumers. Once that happens, it’s nearly impossible to regain. A debt-loaded balance sheet and negative cash flow doesn’t help.

Others argue the company no longer has a clear vision to bring customers back.

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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