So J.C. Penney (NYSE : JCP) had a stunning 25% move today, the best performance for the stock since 1967, according to research done by CNBC. Impressive? Certainly. Will it be enough? Doubtful. The biggest hurdle that was supposedly overcome and resulted in swaying investor sentiment on the bull side was the idea that JCP is not going bankrupt any time soon, stemming from a 2% increase in retail comps. There were other metrics floating around that failed to capture my attention from their conference call but the bottom line moving forward is, can the gross profit margin improve enough to keep the embattled retailer in solvency?

Questions, questions...there is, I firmly believe, a solution to this almost cancerous dilemma that JCP finds itself in, but it will not be easy. It goes without saying that any solution forwarded by their illustrious management team will need to address one key component : who the hell is shopping at J.C. Penney? Is it the affluent, the even more embattled "1%-ers?" Ehh...probably not. Is it the upper middle-class? Williams-Sonoma and its pseudo-swanky ilk are likely to compete for major chunks of market share. Will the target audience be the lower class? This seems like the most probable sector, but the near monopoly that Wal-Mart has in appealing to this broad category would make any concerted attempt to conquer this stronghold a bloody mistake.

So by default, this leaves us with the "middle middle-class," the families that live paycheck-to-paycheck but on a far higher threshold than the lower class. They are the ones that squeak by on a stripped down BMW 3-series sedan rather than make comfortable payments on a fully loaded Toyota Camry. It is awfully hard to appeal to this segment since they are willing to stretch for the reputation of branding : will JCP's fresh new look reverse years of ridicule as a poor man's Macy's?      

Sure, the sales numbers are up but was it worth it? The swing in momentum today had a lot to do with the technicalities of trading psychology more so than actual fundamentals. We have to remember that this company is deeply in debt and has continued to add on to this enormous, overhanging liability. Any increase in margin has to be substantial enough to overcome their financing charges, which in my opinion is deathly large : a cursory look at the cash-flow statement reveals all I could ever care to express on that topic.

JCP a potential reversal? Don't hold your breath.

There's something distinctly un-American about layoffs : we are a brash, unapologetic nation that has a heritage of not just mere growth, but an excess of it. While perceived by others as arrogance, America simply laughs off her critics, a behavior that is seemingly modeled from a bottom up approach.

While flaws are inherent in this and any other country, we've made one thing clear : we don't give up on each other. That "come what may" attitude has changed in a quite pronounced manner over the last two decades as America has become a disposable society. Corporate leaders prance around with talks of the necessity of making "hard decisions" when they damn well know that any decision is an acceptable one, so long as it doesn't affect their wallets.

I wish more people understood the numbers and the truth that is inherent in the outwardly tedious details. Without going too granular, these "cost-cutting initiatives" simply don't work because they merely address the nominal aesthetics of The Problem, but do not address The Problem itself.

Two big companies that are in the media spotlight today, J.C. Penney (NYSE : JCP) and Best Buy (NYSE : BBY), are prime examples of executives not understanding how to run a business in an evolving ecosystem. It may have been great to be the big, bad, Tyrannosaurus Rex, but the race has now shifted to the leverage of the more nimble raptors. The dilemma is not the size of the T-Rex because let's face it : no matter how much that puppy goes on a diet, it ain't getting much smaller!

Yet management across a plethora of industries buy into the cost-cutting madness : by being smaller and weaker, they reason, they would be able to compete with the speed of the raptors. But by artificially reducing the infrastructure, the T-Rex has given up one of its advantages for a questionable and partial benefit. In the meantime, the raptor has given up nothing, thereby increasing its pound-for-pound capabilities against a weakened T-Rex.

Sometimes, a company absolutely has no choice but to cut for the sake of its survival : everyone understands that. But to make that decision, the entire business strategy must incorporate the cut into its plan. An amputation of a badly rotting organ has to be both precise and complete ; a lapse in either category will inevitably create more serious, likely fatal problems later.

Layoffs are serious business. They have long running consequences that may not be appreciated during the stark emotions of the moment, but consequences care not about the intentions of the jettison. Because of this, they should be absolutely avoided if at all possible, but if nothing can be done about the inevitable, an overhaul of the business model must align with the hard decision to give the company's future a chance.

It is the American thing to do...