What happened

Shares of Sears Holdings (NASDAQOTH:SHLDQ) fell 11.5% Monday after the department store chain announced that Bruce Berkowitz has decided to step down from its board of directors. Berkowitz -- who also serves as Chief Investment Officer of Fairholme Capital Management and joined Sears' board in February 2016 -- will resign from his post effective Oct. 31. 

In a separate SEC filing dated Oct. 13, Fairholme Capital reported it will unwind an unnamed fund -- later identified as Fairholme Partnership by sources speaking to Bloomberg -- and distribute shares to investors, including 3.14 million Sears shares and warrants.

Sears store exterior


So what

"It has been a pleasure to serve on the board of Sears Holdings and work closely with Eddie and the rest of the leadership team," stated Berkowitz. "I wish the company and its associates all the best as Sears Holdings continues to execute on its strategic priorities."

In a statement released on Monday, Fairholme noted that one of Berkowitz's goals in joining Sears' board was to more effectively communicate his perspective on the company.

"Mr. Berkowitz believes that he has achieved that objective," Fairholme elaborated, "and was pleased to have the opportunity to provide input during the formulation of the company's strategic restructuring program, which was announced earlier this year.

Now what

To be fair, Berkowitz remains one of Sears' largest investors; According to an SEC filing dated Oct. 12, Fairholme Capital Management owned roughly 27 million Sears shares, giving it a roughly 25% stake in the company. So assuming Berkowitz doesn't contradict his statements above by quickly unwinding his firm's stake in the coming weeks, his departure from the board shouldn't necessarily be viewed as signalling a lack of confidence in Sears' ongoing turnaround. 

But it's also obvious that Sears has plenty of work to do as it strives to regain sustained profitability by cutting costs and maximizing the value of brands like Kenmore. Given the added uncertainty created by this resignation, it was no surprise to see Sears stock plunge Monday.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.