What happened

Shares of Sears Holding Corp (NASDAQ:SHLDQ) were heading south today alongside other department store chains after Deutsche Bank issued a negative report about the sector, pushing several department store names downward, including Macy'sKohl's, and J.C. Penney. As the weakest of the bunch, Sears fell the furthest. The stock closed down 9.4%.

The exterior of a Sears department store.

Image source: Sears.

So what

In a research note, analyst Paul Trussell said he sees "limited upside" for the department store sector, adding, "While holiday (sales) marked a solid improvement across the group, we think valuation is now ahead of itself as we believe fundamental upside is limited." 

Trussell also said he had more faith in Nordstrom than the other industry stocks.

Now what  

Sears stock is normally volatile as it's heavily shorted and is popular with day traders, so it wasn't surprising to see it trade down nearly 10% on the report. 

It's no secret that department stores are one of the most challenged spaces in retail, an industry that is undergoing massive changes. In the e-commerce era, the model is fast becoming outdated, and department stores will need to adapt in order to survive.

Trussell's opinion doesn't directly affect Sears, but considering the company is already fighting to stave off bankruptcy, it's not a surprise to see investors flee on his report.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.