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Why Sears Holdings Stock Jumped Today

By Jeremy Bowman – Updated Sep 6, 2018 at 4:23PM

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Shares of the department store rallied seemingly in anticipation of its earnings report.

What happened

Shares of Sears Holdings (SHLDQ) were moving higher on Thursday as investors seemed to be looking forward to the company's second-quarter earnings report after hours. Though Sears has made no formal announcement about its earnings date, the news is expected out shortly, if not today, as it has already been more than three months since the company's last earnings report. Yahoo! Finance, for example, said the report was expected between Tuesday and today.

In apparent anticipation of the numbers, the stock was up 12.8% as of 3:41 p.m. EDT.

The exterior of a Sears department store.

Image source: Sears Holdings.

So what 

Analysts expect another bloodbath of a quarter for Sears as they see revenue falling 33.4% to $2.91 billion. No estimates were available for earnings. But the company is likely to post another wide loss as comparable sales have been plunging and it has been selling off assets and closing stores in a desperate effort to stay afloat. 

Even if the upcoming report is better than expected, the stock is still likely going to zero, considering the trajectory of the business and the challenges it faces as its stores are outdated and dilapidated, and many suppliers are unwilling to extend it credit.

Now what

Last week, an expanded partnership with Amazon to install tires purchased on Amazon breathed some temporarily life into the stock, but it's going to take much more than that to save the company. Last month, CEO Eddie Lampert also offered to buy the Kenmore appliance brand from Sears for $400 million, a further sign of its woes and the cash crunch it  faces.

With the stock trading just north of $1, there's room for a short-term upside bounce, especially as the share value is being driven by day traders. But don't be fooled: Sears stock is not a safe place to put your money.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.

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