J.C. Penney Company Inc (NYSE:JCP) Hovers Around 52-Week Low: What Next?

J.C. Penney Company Inc (NYSE:JCP) Hovers Around 52-Week Low: What Next?


Iconic departmental store chain J.C. Penney Company Inc (NYSE:JCP) has been in trouble for quite a while due to its mountain of debt, and its stock price has crashed to historic lows. However, it seems that the coronavirus pandemic has come as a hammer blow for the company.

The pandemic has sunk healthy businesses over the past weeks, but for a struggling company, it can be brutal. People have decided to self-isolate, and not many are going to head back into large departmental stores anytime soon. In such a situation, J.C. Penney’s debt burden could become unmanageable.

Earnings Recap

The company has had a disappointing time in recent months, and in the fourth quarter, its net sales went down by as much as 8%. Although it is true that J.S. Penney managed to surprisingly report a profit and liquidity of $1.8 billion, the management still projected sales declines of 3.5% to 4.5% in 2020. The company needed smooth sailing for some time, but the coronavirus pandemic has come as a massive disruption.

At this point, it has debts of $3.7 billion and cash as well as investments totally $386 million. Many other companies are drawing on their credit lines to operate smoothly, but J.C. Penny does not have that option.

There may have been some hope about a turnaround in the departmental store chain in the coming quarter, but with the onset of coronavirus, things have turned dire for the company. Experts believe that the global economy might be on the verge of entering into a damaging recession, and that might prove to be a particularly difficult thing to negotiate for J.C. Penny. In less than a year, the company has obligations due to the tune of $2.3 billion.

The company’s finances have been under immense pressure for some years now, and even if stores reopen, the damage done to its finances might prove to be too big to control. Sign-up for continuing coverage on shares of $JCP stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $JCP, either long or short, and we have not been compensated for this article.

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