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Cramer: My Plan for JC Penney Turnaround

Just when you think things can't possibly get any worse for JC Penney, they do. Earlier in the week, the company reported a much larger than expected loss generating even more concerns about the fiscal health of the beleaguered department store. It's an issue JC Penney has been grappling with for quite some time

Here are some of the key concerns:

- Penney said its fourth-quarter net loss was $428 million, bringing its full-year loss to $985 million.

- Revenue decreased to $3.88 billion from $ 5.43 billion a year ago. Analysts had expected the company to report $4.08 billion in revenue.

- J.C. Penney's gross margin was 24 percent, which the company attributed to lower-than-expected sales and a higher level of clearance merchandise that was related to inventory reductions. That's down from 30 percent a year ago.

But of all the metrics – Jim Cramer said the following is perhaps most worrisome.

- Same-store sales fell 32 percent during the quarter, compared with a 2-percent drop in the year-earlier period.

"As Michael Exstein from Credit Suisse said in his sell rating summary, this was a 'beyond worst case scenario quarterly result,'" Cramer said. The Mad Money host thinks it's time for JC Penney to do something drastic. Something dramatic. Something big.

"Scrap the name JC Penney," Cramer said. I am not kidding."

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Cramer argues that the so-called turnaround engineered by CEO Ron Johnson has not only stalled out – but it's actually done the opposite of what was intended. That is, it's tarnished JC Penney, making it a place that people don't want to shop. And perhaps worse, people who do shop at JC Penney don't want friends to know it.

"For example, if you buy one of the new Joe Fresh selections, a very attractive line of clothes at JC Penney, and tell someone who compliments you – that person won't even think of going themselves because the current sentiment is -- who shops at JC Penney?"

Therefore, "the new lines of clothes and the new lines of home goods are dead on arrival," he said. And those brands are at the heart of Johnson's turnaround strategy.

However, by changing the name, the company would not only remove what can only be described as a stigma, but they could again appear fresh and new.

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Whatever the company does, Cramer hopes it happens quickly.

"I have never seen any company come back from down 30% plus comps," he said. "If Johnson wants to succeed, he has to change the name of the enterprise. Yes, the whole enterprise," Cramer said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

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