JC Penney shares are plummeting today after a big earnings whiff yesterday.
One bright spot was how much cash the company accumulated.
But even that is dubious.
Morgan Stanley's Kimberly Greenberger notes that it looks like JC Penney is defering payments to vendors.
JCP deferring vendor payments to shore up cash? Inventory dropped 20% y/y, still above JCP's -32% SSS, but merchandise accounts payable rose 14%. Typically, inventory and payables move together, suggesting JCP is delaying payments. Mgmt indicated it is changing vendor payment terms to be more in line with industry norms. Payables now represent 50% of inventory, much higher than peer M's 30%. In fact, had JCP's payables balance declined in line with inventory, payables would have represented 35% of inventory, much closer to its peer, but cash would have been $344M lower.