What happened

Shares of J.C. Penney (NYSE:JCP) traded down more than 11% on Thursday after the struggling retailer reported weak holiday sales. The results were actually within range of what the company had expected, but investors were disappointed to see sales decline during the key holiday season.

So what

Before markets opened Thursday, the retailer reported that holiday comparable-store sales fell 7.5% year over year, or down 5.3% when adjusted for the impact of the company's exit from the major appliance business and other categories. J.C. Penney reaffirmed its full-year guidance for comps to be down 7% to 8%, and said it expects adjusted EBITDA to exceed $475 million.

Inside a mall atrium.

Image source: Getty Images.

J.C. Penney, like its department store peers, is attempting to weather consumers' shift away from traditional mall-based stores and toward specialty retailers and e-commerce. CEO Jill Soltau has a comprehensive plan to modernize and rejuvenate the business and better manage inventory.

The company has said that any turnaround will take time, so the poor holiday shopping season shouldn't have come as a surprise. The fear among investors is that with each holiday season, J.C. Penney is becoming less relevant to consumers, potentially creating a hole too deep for any management team to climb out of.

Now what

Even in the best-case scenario, J.C. Penney's future is challenged. The company has more than $3 billion in debt coming due over the next decade, with most of that in the next few years, limiting the cash available to fund a restructuring. Even if Soltau is making all the right moves, it remains a story best watched from the sidelines.