JC Penney Shares Are Getting Slammed

Earlier today the retailer said it was "pleased" with its holiday performance but did not release any specific sales figures.

Brian Sozzi of Belus Capital Advisors pointed out three takeaways from both the release and the market reaction.

Basically, J.C. Penney has been pushed out of its comfort zone to draw in shoppers and investors think the retailer will need other sources of liquidity this year.

1. "JC Penney's pickup in clearance inventory in the second week of December, as we chronicled, came as consumers responded in a meh manner to Black Friday engagement efforts. In other words, JC Penney is having to go outside of its comfort zone in terms of promotions to reconnect to consumers that were letdown by the Ron Johnson era."
2. "There remains pockets of JC Penney's sales floor, for example big ticket furniture, that are simply not moving despite increased promotions. We continue to believe JC Penney will have to undergo a firesale on slow-moving furniture packages to reset the floor space."
3. "A return to profitability continues to be pushed out via what's happening in the stores today. Hence, the market interprets that as at some point in 2014, JC Penney may need further sources of liquidity to support its return to a semblance of its former self. Note such liquidity would come at a penalty to equity holders."

Here's a look at its five-day performance.