The reports have been flying in recent days that J.C. Penney is running low on cash reserves and needs to find ways to get some. As to how it will do that, the question was answered yesterday when the chain announced it will put 84 million shares of the company's stock up for sale.
The announcement that it will sell shares seems to fly in the face of an earlier statement by the company that seemed designed to quell any fears that investors and other stakeholders might have about Penney's future. In the statement, Penney management said turnaround efforts were gaining traction and that management was "encouraged by improvements in purchase conversion both in store and on jcp.com."
Penney's share price tumbled by 15 percent in after-hours trading on news of the stock sale.
Brian Sozzi, CEO at Belus Capital Advisors, told CNN Money that the market reacted to "the shock and awe of seeing them raise more money." Mr. Sozzi added, it could be "the last money they can raise."
"They really have a very short period of time to turn it around," Barry Ritholtz, CIO of Ritholtz Wealth Management, told Breakout on Yahoo's Finance site. "You have to have the confidence of your suppliers and the people who lend you money, otherwise you're in trouble."
How optimistic are you that a stock sale will give J.C. Penney enough of a cash cushion for the department store chain to complete its turnaround?