But if there is a silver lining in the limp performance from Penney it’s that it has stirred chatter that Penny’s is a potential target for a leverage buyout. Such a move would afford the company time to change its appearance in an effort to make it again attractive to investors. Highlighting the possibility is the sizable position held by activist hedge fund investor William Ackman of Pershing Square.
Also making it attractive as an LBO candidate is the fact that although Penney’s revenue drop has added up to more than 20% over the last three quarters, the company actually loses very little money. In the most recent quarter, the company reported a loss of $123 million on revenue of $3 billion. Plus, in a rock-bottom, historic low interest rate economy, its $2.9 billion debt is highly manageable.
So, win or lose in court, Penney looks poised to emerge as the real diva in this domestic goods dispute.
The article Who Is The Real Diva in the Dispute Over Martha Stewart’s Line? originally appeared on Fool.com and is written by Diane Alter.
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