Matrix 8b

from the previous 2 years and looks like it is in serious trouble. Year or year, JCP has seen revenues fall from $17.3B in 2011 to $13.0 in 2012. This along with an increase in SGA costs has led to a reduction in the bottom line from a loss of $152.0M to an even larger loss of $985.0M.

JCP’s financial situation is precarious and deteriorating quickly as the company continues to lose money. That isn't to say that bankruptcy is an immediate risk, given the fact that the company does not have any significant amount of long-term debt coming due until October of 2015 ($200 million); nevertheless bankruptcy does appear to be in its future, assuming it is unable to meaningfully increase its sales during the next several months.

Given the high level of volatility that the company's sales are experiencing, I cannot accurately estimate how long it will survive, especially given that it can potentially raise capital by issuing stock. Nevertheless, it seems like the situation may be more dire than the company's most recent financial statement indicates. Furthermore, I suspect that the company may be being less than forthright in telling its shareholders just how critical its financial situation actually is.

For the year the company lost nearly $1 billion. The substantial loss is due to the company's sales numbers falling off a cliff. This is completely unsustainable, especially considering that the company lost $151 million in 2011, while its sales in 2012 were down 32% from a year ago--even given $600 million in 2012 cost cuts the company would have to exhibit high double-digit sales growth (at least 30%, given that 47% would be break-even with 2011 levels) in order to staunch the bleeding of precious cash. The company will have to exhibit this sales growth despite the fact that it has just $1 billion left in its credit facility and just $1.1 billion in working capital, while it has expenses of over $1 billion per month. It does not have much time before the bondholders...