The number of shares sold short in J.C. Penney Co. Inc. (NYSE: JCP) was 87.3 million for the period that ended July 29. This is a massive 29% of the float of the company’s shares, a sign of just how many investors are pessimistic about the retailer’s performance.

And the anxiety is well founded. While J.C. Penney shares have risen recently, up just over 7% in the past month, many department stores have seen their fortunes collapse since the start of the year, in particular Sears Holdings Corp. (NASDAQ: SHLD), which owns Sears and Kmart, and Macy’s Inc. (NYSE: M). Can J.C. Penney dodge the same bullet? Probably not.

J.C. Penney’s most recent quarter gave investors some hope. In that period, revenue fell 2% to $2.8 billion. The company’s net loss was $69 million, compared with a loss of $144 million in the same quarter a year ago. Guidance said little more than that the company would continue its very modest comeback.

E-commerce is still an essential area in which Penney has had little success. It is well outgunned by Amazon.com Inc. (NASDAQ: AMZN) and it cannot be helped by Wal-Mart Stores Inc.’s (NYSE: WMT) buyout of online retail firm Jet.com for $3.3 billion. J.C. Penney does not have the balance sheet to buy e-commerce market share.

And 3% to 4% same-store sales, which is what J.C. Penney forecasts for this year, are not nearly enough. The retailer’s sales were $17.3 billion five years ago. In the most recent year, the figure was $12.6 billion.

Over the past five years, J.C. Penney’s stock has dropped 61%, against a 94% increase in the S&P 500.

J.C. Penney faces a wall of skeptics, and they will see if they are right as the retailer readies its next earnings release.

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