So far this year, J.C. Penney Co. Inc. (NYSE: JCP) has borrowed about $3 billion to buy its way out of the hole it dug for itself under former CEO Ron Johnson. Now there are reports that the store is looking to borrow even more cash while interest rates remain low.

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.

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