J.C. Penney & Sears: Why They’re Not Dead Yet!: JCP, SHLD

Another day another beating for J.C. Penney (JCP). Shares fell 8.9% on Tuesday after a research report from JPMorgan (JPM) suggested the troubled retailer was at risk of running out of money before its turnaround efforts take hold. The analyst said proceeds from J.C. Penney's recently completed secondary share offering enabled management to order goods in sufficient quantities for the holiday quarter but fell short of providing the company with an "infinite treasure chest."

Shares of J.C. Penney have dropped more than 40% since Breakout outlined the potential death spiral scenario facing the company. What concerns J.C. Penney vendors is the a combination of the 27% revenue drop since 2011 and $1.3 billion loss in 2013. Nothing personal but most companies are reluctant to ship goods to retailers losing more than a billion dollars a year on less than $13 billion in revenues.

If misery loves company, the plight of Sears Holding Corp (SHLD) must be making J.C. Penney investors giddy. Shares of Sears got beaten up last week after it emerged that the company had sold profitable locations to fund other operations. Regardless of last week's story, Sears has been reorganizing itself almost continuously since the company merged with Kmart in 2004. (more)

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