A report Monday morning at Bloomberg cites unnamed sources who claim the company is talking with Goldman Sachs Group Inc. (NYSE: GS) about additional funding options, including taking more loans using the company’s $4 billion in real-estate assets as collateral. Goldman arranged a $2.25 billion loan for J.C. Penney earlier this year.
J.C. Penney posted an adjusted net loss in the second quarter of $2.16 per share. At the time, the consensus estimate for the third quarter called for a loss of $0.80 a share. That estimate now has fallen to an estimated loss of $1.68 a share. Building up a war chest now may be a good idea.
Even though sales fell in the second quarter, the decline was half what it was in the same period a year ago. Getting back to its roots with weekly sales and discounts probably has helped the company win back some customers who could not figure out what the store was doing under Johnson. But how successful can J.C. Penney hope to be?
Discounters like Dollar Tree Inc. (NASDAQ: DLTR) and Family Dollar Stores Inc. (NYSE: FDO) have posted share price gains in the past 12 months of nearly 20% and 10%, respectively. Department store Dillard’s Inc. (NYSE: DDS) is up about 5% in the past 12 months, and Kohl’s Corp. (NYSE: KSS) is off a little more than 1% in the past 12 months. It is pretty clear which retail group is winning that struggle.
If J.C. Penney is losing sales, they very likely are going to the discounters, not the department stores. The company could win these customers back, but J.C. Penney will have to win on price and that will not help profitability. To make matters tougher, if J.C. Penney is to have a chance against the department stores, it also will have to base its appeal on price. This could be a real no-win situation.
All that leaves is the J.C. Penney’s real estate, which could be leveraged to the hilt by the end of the year. All in all, not a happy portrait.
Shares of J.C. Penney are down about 1.2% today, at $12.80 in a 52-week range of $12.12 to $27.00.
100 Million Americans Are Missing This Crucial Retirement Tool
The thought of burdening your family with a financial disaster is most Americans’ nightmare. However, recent studies show that over 100 million Americans still don’t have proper life insurance in the event they pass away.
Life insurance can bring peace of mind – ensuring your loved ones are safeguarded against unforeseen expenses and debts. With premiums often lower than expected and a variety of plans tailored to different life stages and health conditions, securing a policy is more accessible than ever.
A quick, no-obligation quote can provide valuable insight into what’s available and what might best suit your family’s needs. Life insurance is a simple step you can take today to help secure peace of mind for your loved ones tomorrow.
Click here to learn how to get a quote in just a few minutes.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.