Has J.C. Penney Bottomed?

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J.C. Penney (NYSE:JCP) has been one of the most controversial stocks in the United States over the past couple of years. But despite this controversy, there has been only one direction in the stock’s price: down. The stock traded at a high of more than $40 per share toward the beginning of 2012, and since then, it has fallen precipitously, having traded briefly below $5 per share.

The reasons for this are fairly simple.

First, J.C. Penney has been in a lousy financial situation. The company has been losing more than $100 million every month. Furthermore, despite the fact that management has made claims to the effect that the company’s finances are fine, it has had to put up its real estate as collateral and it has even had to issue stock and dilute shareholders.

Second, J.C. Penney has been unable to define a strategy or its target market. Management has essentially tried to rebuild its disenfranchised customer base. These customers left the company given the company’s strategy of doing away with coupons coupled with the fact that the American consumer was in bad shape financially.

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