The company has six months to get its stock up to $1 per share.
JCPenney first joined the New York Stock Exchange in 1979, but this week, the company was warned it could be delisted if it doesn’t bring up its stock price. The stock has trailed below $1 since mid-July after a report came out that the company is working with experts to restructure its debt.
In some ways, this isn’t surprising. The company has been struggling for a while now and actively working to improve its financial situation.
But the prospect of bankruptcy disconcerted investors, and the stock plummeted to $0.65 per share. However, JCPenney does have six months to turn things around and get its stock trading at above $1.
Things to Watch in the Earnings Report
The company is scheduled to release its second-quarter earnings report this Thursday. Investors will undoubtedly be watching for any signs that the company is making progress. Here’s what they’ll look for in the earnings report…
Is the Company’s Gross Margin Improving?
JCPenney has been seriously affected by its falling gross margin in the past few years. This figure continues to drop during each fiscal year, and that’s impacted the company’s profitability.
This is due to a variety of factors. The company faces stiff competition and is far from the best retail option for consumers. And the company tried to introduce a number of low-cost products or online-only sales — and these initiatives mostly fell flat.
Will JCPenney Be Able to Lower Its Debt?
If JCPenney does end up filing for bankruptcy, its stock will essentially be worthless. That’s a big concern for investors or anyone considering investing in the company.
Over the past four years, JCPenney closed about 200 stores, but it’s still hasn’t been enough. According to Bloomberg, the company is considering giving creditors higher collateral or offering creditors additional protections in exchange for certain concessions.
Can JCPenney Turn Things Around?
At this point, it seems unlikely that JCPenney will be able to turn things around. The company hasn’t turned a profit since 2010.
If the company is delisted from the New York Stock Exchange, the stock will only be available for over-the-counter trades. The earnings report on Thursday should give a good indication as to what direction the company might be headed.
