Tomahawk, WI 11/06/2013 (BasicsMedia) – There comes a time when a struggling company ahs to choose between trading publicly and going private. There was a time when this seemed to be the only logical move that J.C. Penney Company, Inc. (NYSE:JCP) had to make. It never took such a path, but opted to launch a secondary offering that brought more than $750 million into its accounts. It appears as if JCP has made a huge turnaround and is probably on its way towards profitability. If the company fails to declare any profits in the next few financial quarters, should it think of going private?

JCP’s Need for a Better Business Model

JCP’s main problem according to me is to come up with a new business model. Even as it does so, it needs to find ways of addressing their needs of its regular customers instead of alienating them the way it did a couple of years ago. If JCP is to change its business model and develop new strategies to help it remain in business, it may face insurmountable challenges if it does so while operating as a public company. Under the current structure, the company cannot ignore the responsibilities it owes its investors and Wall Street in general. It must evolve to a private entity.

JCP appears to have done well in its September sales, where it reported a tiny yet significant gain. Another recent development is that Bill Ackman got rid of his entire stake in the company for a loss of $500 million. The company has cash on hand, and it is not leaking financially as it was doing only a few months ago. This should not be mistaken for excellence in terms of operating and financial performance. JCP is on a good path, but it has a long way to go to change its perception as an unstable company or stock worth anyone’s investments, time, and effort.

JCP’s Biggest Failure

JCP has failed to turnaround its brand from a loss making company to a profitable one that is attractive to investors and Wall Street alike. JCP’s online sales are nothing to write home about, representing only 8% of the entire total. Its fixed cost structure is quite high for a struggling company. It has failed to propose a deal that customers cannot resist or turn away from in all its previous attempts. These are a few of the factors that are at play where JCP is concerned, and will probably continue doing so, not unless the company decides to go private.

If JCP continues to operate as a public company, it should be ready for increased scrutiny from the public, shareholders, and the media. Unless it succeeds in declaring profits, the increased level of scrutiny will make it impossible for JCP to achieve its goals in a calm environment. JCP’s failures should never be limited to cosmetic failures only, but should include the systematic shortcomings as well. If they were only cosmetic, then its former CEO, Ron Johnson, would have succeeded in his attempts give JCP a new image. JCP should think of going private.

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