Is There Any Way to Rescue J.C. Penney and Sears?

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Feb. 26 (Bloomberg) -- Greg Rayburn, founder at Kobi Partners, discusses the options available to preserve retailers J.C. Penney and Sears on Bloomberg Television’s “In The Loop.”

Is, as i mentioned, a restructuring expert.

A cleaner, and corporate america, is who greg is.

I want to pull this up.

It shows short interest between jcpenney and also sears.

Above 40%. the highest among any of the other department store chains.

No surprise, given what is happening.

No surprise.

Retailers -- it is the most difficult sector to try to do a turnaround in.

It takes a lot of capital.

But i think the other question retailers always have is whether you are relevant, and if you ask a question regarding jcpenney or sears holdings, neither of them are relevant.

If a one-way come up with -- if they went away, would anybody care?

Would it matter to the consumers?

Factly, i don't think it would -- frankly, i don't think it would.

That is the riddle.

If you were restructuring jcpenney, you say they should file for bankruptcy?


I give them a lot of credit for trying to do it on court, as they say.

What they went through, and the way that the leadership disenfranchised the customer base, gives them a high hurdle that they would be better off filing -- what could they do in the bankruptcy that they can't do now?

A couple of things.

You have leases, you own property.

You would have to go to through their asset base and figure out what size, what parts of the country, where do you think they have a cogent strategy to rebuild or hang onto a customer base?

When you do a turnaround, as most people think that the limited resource is cash.

It is not.

The limited resources always the time and energy of the management team and their focus.

When i come into a situation, it is always about what we are focusing on and what can we move to the side, because you have limited time and energy for the management team to actually drive change and drive improvement.

It gives them that opportunity, in a calmer environment.

Cash is a factor in that.

You can always get cash.

You can leverage something, right?

If there is a cogent strategy -- you are able to get cash.

It is costly.

But you can do it.

The mob might lend you money.

But when you are meandering around a bunch of strategies and a lost customer base, it is very difficult.

If you are doing restructuring with jcpenney or another company, is there a point beyond which you just say, ok, it is not worth salvaging here, we're just going to shut it all down?

Where is the tipping point echo -- where is the tipping point?

You know, jcpenney has artie crusted, but that is a qualitative thing you have to go through.

Board to consider what is in the best interest of stakeholders.

When you are dealing with the company that is burning through a lot of cash, the board's fiduciary duty is to debtors -- i'm sorry, to creditors, as opposed to just shareholders.

That is sort of the switch.

In the restructuring world, once you get into the point -- the shareholders don't enter as much, obviously.

They rank second once you get into trouble.

Most people i know that are speculating in jcpenney, they are not speculating in the stock, they are speculating in the debt.

That should tell you something.


I don't want to put you on the spot, but people say, ok, let's see about what are the turnaround strategies for these retailers.

Blackmun was trying hard to get -- bill ackman was trying hard to get them to change their ways, to get them to spin off their real estate and spin off into a reit.

Maybe for some retailers it is a way to generate cash.

All that is a page out of eddie lampert's book.

He was the first guy in any order of magnitude to monetizing capitalize on real estate links -- monetize and capitalize on real estate holdings.

That doesn't mean that you are viable as a retailer.

You are seeing that play out in spades, and you saw that with ackman and jcpenney.

That will strategy of going from their customer base to young and doing it like that would be the same as if cadillac 10 years ago had said we would stop making big cars.

We will make little cars.

Greg, i wonder if lampert himself should take a page out of lampert's playbook, so to speak.

Sears has formed a separate real estate company.

They have a real estate company within sears but they also have a separate one still under the sears umbrella.

It has been a little bit of talk that maybe that should be spun out into a reit.

Does that make sense for sears, if not jcpenney?

It could.

For me i am more of an operational turnaround guy.

I'm digging about the core business.

Those things can be good to do from the financial balance sheet standpoint and the overall carl icahn standpoint.

Getting your finances in shape to wring value to the stock.

That is fine.

I tend to focus more on what is the core business doing.

If the core business is dying, you've got a problem.

Clearly in those 2 cases, it is.

We will stay with you with much more for the hour.

Julie, thank you so much pretty senior marcus responded julie hyman.

-- thank you so much.

Senior markets correspondent julie hyman.

Moving and shaking this money, the seattle seahawks cornerback russell wilson.

He led the seahawks to the super bowl victory, the dominating victory this month.

Now he is setting his sights a little higher.

Olson talked about his future with charlie rose.

-- wilson talked about his future with charlie rose.

My dream right now and what i want to do when day is be the owner of a football or bespoke in.

I would love to do that --

This text has been automatically generated. It may not be 100% accurate.


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