J.C. Penney (NYSE: JCP), the department store chain, was up in recent market action due to positive features in its recent earnings (chart below).  But, like RadioShack’s (NYSE: RSH) short-lived 11 percent gain after its Super Bowl advertising, the stock price for J.C. Penney should be coming down again.  As with RadioShack and Sears Holdings (NASDAQ: SHLD), the outlook is very bleak for these American retailers.

There are a variety of reasons leading to the collapse of these retail chains.

Competition is always a factor when a business is failing.  That is certainly no different in retail.  Amazon (NASDAQ: AMZN), Target (NYSE: TGT), and Wal-Mart (NYSE: WMT) are all fierce competitors.  Through the Internet, Amazon has done a great deal of damage to the traditional retail sector of standing stores.  For profitable consumer electronic items, Apple (NASDAQ: AAPL) has it own stores that do very well.  There is no comparison between shopping at a RadioShack and visiting the “Genius Bar” at an Apple store.

Many of the stores for J.C. Penney, RadioShack, and Sears Holdings are located in undesirable malls.  The most attractive shopping venues now are open air malls.  Stores in strip shopping centers and enclosed malls are faring poorly with one billion square feet of vacant retail space, according to a recent article in Urban Land magazine.  That is why the real estate of these companies is not as valuable as many investors believe.

There is nothing on the income statement or balance sheet of J.C. Penney, RadioShack, and Sears Holdings that should lure investors into buying.

J.C. Penney has negative sales growth and negative earnings-per-share growth.  It has loads of debt on the balance sheet.  Good luck in paying off that debt as the company is losing money.  The short float for J.C. Penney is nearly 40 percent.  A short float of 5 percent is considered to be troubling for a publicly traded company.  For that reason and many others, investors should stay away from retail stocks like J.C. Penney.