Can JC Penney Turn Around With Less Than 900 Stores?

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J.C. Penney Co. Inc. (NYSE: JCP), the battered retailer, has cut so many stores that it is down to 870 spread throughout the United States and Puerto Rico. The retailer competes against others with larger revenue and store counts. In some ways, the store count is the more critical of the two issues.

J.C. Penney’s store count leaves it way behind industry leader Walmart Inc. (NYSE WMT), which has more than 5,200 stores, as well as Target Corp. (NYSE: TGT) at 1,800 and Sears Holding Corp. (NASDAQ: SHLD), which between its Sears and Kmart brands has nearly 1,200. Niche department stores and discounters have thousand more in aggregate.

The store count also helps create another grim statistic. Annual revenue was relatively flat the past two years at about $12.5 billion. Same-store sales in the current year are expected to be as low as zero, according to the company.

Management is quick to say the company has a web presence at JCPenney.com. Its traffic is rounding error against that of Walmart.com and a large number of websites from other brick-and-mortar retailers and those that are e-commerce only businesses.

J.C. Penney is often forgotten between its earnings releases, except by investors. In the past year, the stock is down 51%. Its market cap is under $800 million, a huge discount to sales. Debt and worry that the company has no chance to recover are the catalysts.

The company cannot afford to add stores. The cost is well beyond its capacity. Without a bigger footprint, a middle of the road — neither a superstore company nor a discount merchandise specialist — has lost whatever its best chance was.

J.C. Penney may be forgotten, but it is not gone as it barely hangs on the ropes.