Cramer: JC Penney 'Is in a True Tailspin'

After J.C. Penney posted a larger-than-expected fourth quarter loss and a sharp drop in same store sales, CNBC's Jim Cramer said Tuesday the retailer was in "a true tailspin."

"How long can this man keep his job?" Cramer asked on "Squawk on the Street," referring to CEO Ron Johnson.

"They basically have to rename the company," Cramer added, after agreeing that J.C. Penney has ignored its core customer base.

"This company is being run into the ground as we speak, I have never seen a company in this type of tailspin ever pull out of it, and I don't think that J.C. Penney will be any different," Cramer said on "Squawk Box."

"There is nothing distinguishing about the company. What happens if they lose the Martha Stewart case?" Cramer asked.

Cramer called the optimism expressed in JCP's earnings conference call "Neverland syndrome. Ron Johnson and Andrew Mason (Groupon CEO), two guys from Fantasyland." Cramer saw similar optimism in the Groupon conference call after that company also disappointed Wall Street.

If you're playing the J.C. Penney story as an investor, Cramer suggests betting against the company's senior debt.

"If I were running J.C. Penney, I would find which stores are working, like Sears has done—put money into those stores and close the ones that are underperforming," he said.

"Sears had a good quarter, but JCP would make anyone look good." Cramer said. "Unlike Ron Johnson, (Sears CEO) Eddie Lampert continues to focus on its core customers. They're also focusing on Internet, which is doing well, versus J.C. Penney's Internet, which is faltering beyond belief."

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

Excluding items, the retailer reported a loss of $1.95 a share, compared with a 74-cent profit in the year-earlier period. Analysts had expected a much smaller loss of 18 cents a share, according to a consensus estimate from Thomson Reuters.

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.

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

Analysts had already been expecting same-store sales to decline 27.8 percent, but the even weaker figure put huge pressure on Johnson.

— By CNBC's Paul Toscano. Follow him on Twitter and get the latest stories from "Squawk on the Street" @ToscanoPaul