Is J.C. Penney's (JCP) comeback for real? Investors will find out when the beleaguered retailer releases fiscal second-quarter earnings after the close Thursday. Wall Street is expecting J.C. Penney to report a loss of $0.93 per share and revenue of $2.79 billion, an increase of 4% from the year ago quarter. Investors sent shares of J.C. Penney up 16% after the company said in May that first-quarter earnings beat expectations.

Howard Davidowitz, a longtime retail consultant, tells Yahoo Finance that Penney’s turnaround won’t happen until the retailer shutters more of its low-volume stores and is able to attract affluent shoppers like its competitor Macy’s (M).

“Penney’s needs major restructuring to get themselves back on track,” says Davidowitz. “Right now the company is on track to go broke.”

Davidowitz has been very critical of J.C. Penney, calling the company a “catastrophe” and “a disaster.” He says Penney’s will hemorrhage money for the foreseeable future because its core consumer base is the middle-income consumer, a group that is still struggling financially five years into the economic recovery.

J.C. Penney has been desperate to return to profitability. Its old management team, led by former CEO Mike Ullman, returned to the helm after Penney’s board of directors fired CEO Ron Johnson. Ullman has brought back many of the sales promotions that Johnson had shunned and the retailer has teamed up with Sephora to open locations in 13 J.C. Penney stores. J.C. Penney announced in January that it would close 33 stores as part of its strategic turnaround, an annual cost savings of nearly $65 million. J.C. Penney is also trying to increase its visibility in some of the nation’s biggest markets and will debut its first store in Brooklyn at the end of August.

Davidowitz is not down on the entire retail sector. He recommends drugstore chains CVS Caremark (CVS) and Walgreen Co. (WAG) and the home apparel retailer Restoration Hardware (RH).

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