What happened
Shares of Sears Holding Corp. (SHLDQ) were sliding today as investors continued to react to last week's discouraging earnings reports from its fellow department store chains and an important real estate investor cheered its demise.
As of 11:40 a.m. EDT, the stock was down 7.1%.
Image source: Sears Holdings.
So what
Department store stocks crumbled last week as Macy's, Kohl's, J.C. Penney, and Nordstrom all reported declining comparable sales, the latest sign that consumers continue to flee from the traditional retail stalwarts. Sears will not report earnings until later this month, but the stock has now fallen significantly over the last three days, giving up 21%.
Separately, Barry Sternlicht, whose Starwood Group owns malls around the country, said on CNBC, "With all due respect to Sears, they are the weakest performer in the mall and we'd like them to go away." The statement confirms Sears ongoing weakness, and it's a foreboding sign when even its landlord wants it to fail so it can bring more attractive business into the mall. It's not the first time Sternlicht has made such a statement.
Now what
Sears shares popped briefly last week after CEO Eddie Lampert vigorously defended the company in an interview with the Chicago Tribune and at the company's shareholders meeting, but the facts make Sears' comeback increasingly unlikely. The company has reported an operating loss of hundreds of millions of dollars since 2010 and comparable sales have declined sharply in recent years. It has also sold or spun off many of its valuable brands like Craftsman and Lands' End.
For the first quarter, analysts are expecting a loss of $0.72 per share, which is mitigated by the Craftsman sale, and a drop in revenue of 24.8% to $4.05 billion. If the company continues to shed sales like that, it will soon be forced to declare bankruptcy.
