JC Penney is already a company in deep trouble, posting huge losses, and firing CEO Ron Johnson. Now, the company’s losing so much cash that it’s trying to raise $1 billion.
The Wall Street Journal reports that the company hired bankers at Blackstone for advice on how it can bolster its cash pile before it shrinks to nothing. The report cites bond analysts who don’t think the company will be able to generate enough cash to keep itself running beyond this year.
At the end of 2012, JCPenney had $930 million in cash and cash equivalents, according to an annual filing with the SEC. The year before, it had $1.5 billion — so it’s basically losing half a billion a year in negative cashflow.
This cash crunch could severely limit what new CEO Mike Ullman can do. He has to do something to bring customers back to the store, whether its hoping that Johnson’s transition to boutiques will finally pay off, or start to offer
But the company’s already announced that it’s reducing the number of stores that it will renovate with Johnson’s “shops”, and a cash crunch would limit the ability to offer big deals or to advertise them.
Either way, the company looks like it will need to sell a minority stake or find a significant investor, sooner rather than later.
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