Why Sears Holdings' Shares Tumbled

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What: Shares of Sears Holdings (NASDAQ: SHLD  ) were getting dumped today, falling 14% after the retailer posted dismal holiday sales.

So what: The retailer said same-store sales fell 7.4% companywide in the quarter to date, dropping 9.2% at Sears Domestic locations, 5.7% at Kmart locations, and 4.4% at Sears Canada stores. Sears management offered no commentary on the performance, but did revise its adjusted per-share loss estimate for the quarter down to $2.01-$2.98. Analysts had expected a much stronger result at a loss per share of $0.16.

Now what: Shares of Sears hit a two-year low on the news, falling below $37. They had soared to more than $80 during that period, because many investors had seen the company as an asset play due to its real estate holdings and ownership of brands such as Kenmore and Craftsman. Today's drop seems to underscore the company's operational problems, however. As a retailer, Sears has been struggling for years, and is unlikely to escape from the losses that continue to pile up. That's reason enough to expect shares to continue to fall. 

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  • Report this Comment On January 12, 2014, at 4:22 AM, StateofClass wrote:

    Sears is dead and just doesn't know it yet, like many retailers they've become a zombie store, running on their past brand names.

    Trends are pointing away from the malls of America, especialy in the smaller towns. Once where people use to spend most of their shopping time and dollars, are now close to empty.

    Retail is going down the same road as manufactoring did in the 80's and 90's in America. Less for more, equals loss.

    Heres a trend everyone needs to look at, when the Good Will is one of the busiest places during Christmas, someone needs to take notice.

  • Report this Comment On January 13, 2014, at 12:21 PM, Grumpster wrote:

    I can tell you exactly why Sears is going down. It is because of upper level management in Chi-Town that have never been to the stores to see what people really do at work, how people really shop, and how god-awful a lot of their products are. Nobody wants Craftsman tools that break like they do nowadays. Sales are confusing. Salespeople are not well educated in their areas (with the exception of a few). They are GROSSLY underpaid and the turnover is horrible. The entire system needs to be undone and started over. I used to be a Ops manager there. I saw the monkey businesses and red tape that was going on. Middle managers were forever rearranging things to fit a floor plan drawn out by flunkies in Chicago who don't shop themselves. Thieves abound because the security dept is too busy looking at internal theft and let 60" TV's walk out the door (and then don't stop them past the curb). Stores should be gutted and revamped. Management should be free to set stores up to favor local markets. Tools and such should be made back to quality standards so they don't break or catch fire the first time you use them. Repair service should be back in-house and the entire process smoothed out. TRAIN YOUR STAFF!!! Get registers that aren't Apple IIe technology. Sears is like the Model A trying to go down the Autobahn. It will get run over by everybody else.

  • Report this Comment On January 13, 2014, at 1:35 PM, XXF wrote:

    Sears is bleeding cash at a pretty alarming rate. Market cap of $3.9B, operating cash outflow of $1.6B (39 weeks ending 11/2/13) financed by issuing $1.6B in additional debt. $1.8B in equity and I am having a hard time imagining that this company is worth even 2.2 times book.

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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9/4/2015 3:59 PM
SHLD $27.20 Up +0.06 +0.22%
Sears Holdings CAPS Rating: *