Tomahawk, WI 01/10/2014 (BasicsMedia) – It is going to be hard to believe whatever J.C. Penney Company, Inc. (NYSE:JCP) management says in news release or press conferences. In fact, it is already hard to digest the reports which the company issues late last year touting its turnaround progress. Investors who have been tracking this stock know that it is having problems. What is worrying is that these problems seem to be perpetual.

In October and November, the company’s CEO Mike Ullman proudly declared that sales went up in the two months and painted a positive picture of the stock. These notable monthly sales gains came after many months of decline in same store sales. There was no reason to doubt Mr. Ullman when he made the announcements; after all, he had just helped the company to raise $3 billion for the recovery.

 However, for December, the company issued a shocker. This week the management issued a review of its performance last month and largely swept the figures under the carpet. For this reason, it was clear that the much hyped recovery of J.C. Penney Company, Inc. (NYSE:JCP) was first stalling. But why is the company hiding the facts?

This beats logic. And this is the reason this stock could becoming radioactive sooner than later. All that JCP had long wanted is investor confidence, and I was earning this in record speed given the manner in which investors had become bullish in the stock, sometimes defying analysts’ negative sentiments. But now, it will be hard for the company to be believed it starts behaving in an unbecoming manner.


The change of management in J.C. Penney Company, Inc. (NYSE:JCP) was engineered by hedge funds which bought their way into the company’s board. Funds managers played an instrumental role in replacing Ron Johnson with Mr. Ullman in the CEO position. This action restored investor confidence. However, of late, the same hedge funds which started the ongoing turnaround efforts started ditching the stock one after the other. Reports of these exits only emerged long after they had been complete. However, investors were made to believe that nothing alarming was going on. The management kept making reference to the gains made in the months of October and November.

Now that the company seems to be herding cats about who to do for the future, it is clear that investors where misled into purchasing the stock. For this reason, there is very little that one can expect from J.C. Penney Company, Inc. (NYSE:JCP), even if the stock were to start going up again. Such upward rally can only serve as opportunity for sellers to cash in while value is still there.

Shares dilution

To raise the reported $3 billion recovery fund, J.C. Penney Company, Inc. (NYSE:JCP) made a secondary common stock offering. This resulted in loss of stock value and a big blow to those who bought the stock at its peaks in 2007. By the way the stock touched its all-time high in 2007 at $87 per share. Today the stock is hovering around $8 percent.

If the company is to remain in operation, another share dilution could be done in the coming months and this will only lead to the stock falling further.

Bottom line

In a nutshell, J.C. Penney Company, Inc. (NYSE:JCP) reveals more weaknesses than strength. The company’s drop in stock price will continue, and so will be the loss of value to investors. The best thing to do no is cutting position in the stock or ditching it altogether, there are several stronger retail alternatives to JCP.

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