The retail industry has been struggling with brick-and-mortar stores closing at record rates. So far in 2019, roughly 6,000 stores have announced closures with only 2,641 new stores opening (3,353 net closures). This store closure figure is expected to double by the end of the year, according to Coresight Research.

JC Penney is no exception to this story. Over the past 5 years this firm has closed down about 19% of its stores. Sales are falling and profits along with it. This firm doesn’t look like it’s going to be able to keep its head above water for much longer unless some significant changes are made.

This company looks to be headed for bankruptcy with its cash reserves dwindling down to nothing and free-cash-flow not able to stay positive. Over just the last 52-weeks this stock is down 57%. JCP has missed revenue estimates on 5 out of the last 6 earnings reports. They just can’t seem to compete with the big online shopping powerhouses like Amazon (AMZN Quick QuoteAMZN - Free Report) , Alibaba (BABA Quick QuoteBABA - Free Report) , and eBay (EBAY Quick QuoteEBAY - Free Report) .

Compared to J.C. Penney’s competitors like Kohl’s (KSS Quick QuoteKSS - Free Report) , Dillard’s (DDS Quick QuoteDDS - Free Report) , and Macy’s (M Quick QuoteM - Free Report) they are performing by far the worst. These other retailers are both able to sustain profitability as well as maintain positive free-cash-flow.

Below is 52-week performance chart comparing these three competitors. KSS +8.9% (red), DDS -12.2% (orange), M -23.6% (green), JCP -57% (blue).

Analyst continue to lower estimates for JCP over the next couple of years. They are expected to post losses for the next two years. I have very little hope that this firm will last much longer.

Conclusion

This is a toxic stock that shouldn’t be in anyone’s portfolio. A once profitable growing retail chain is now a money pit of despair. With analysts continuous downward revisions, this stock is pushed to a Zacks Rank #5 (Strong Sell)