Shares of Sears Holdings (NASDAQOTH:SHLDQ) crashed as much as 8% in early trading Friday after Bloomberg commented on the company's calling-all-hands efforts to slash prices and drive sales in the crucial holiday quarter.
As Bloomberg reports, "Sears has marked down nearly everything in store up to 50% off," but even so, "analysts doubt the retailer will ever regain profitability." Obviously, that's not the kind of thing investors like to hear, and so, Sears stock is selling off by 7.4% as of 11:45 a.m. EST.
According to Bloomberg, Sears' entire inventory has been put on sale this season -- by anywhere from 10% to 50% off. Kmart merchandise is being marked down by as much as 40%. When you consider that Sears hasn't reported a gross profit margin out of the 20th-percentile range this side of the millennium, the massive scale of Sears discounting this season smacks of "desperation," say analysts -- and is almost guaranteed to result in losses, regardless of whether or not it succeeds in growing sales.
Sears stock hasn't booked a full-year profit in nearly seven years. Even if cutting prices succeeds in convincing consumers to do some buying at Sears this season, I don't think stock shoppers should buy Sears at any price.