So what: As the chart above shows, Sears' slide happened gradually over the month of July, and is a continuation of a sell-off that began in June, which in total has shaved off nearly 50% of the stock's value. Concerns about the company's ability to endure have mounted after years of significant losses and declining sales. The slide began with another stinker of an earnings report as the retail parent of Sears and Kmart said comparable sales dropped 14.5% at Sears locations and 7% at Kmart.
Though much effort has been put into unlocking value for shareholders by spinning off such entities as Lands' End, Sears Hometown & Outlet stores, and a portion of Sears Canada, neglect for the core retail brand has overwhelmed the stock and it now seems past the point of return. Sears' latest move was to create a REIT called Seritage, which would buy Sears' property and lease it back to the retail business. While this is a way for the company to generate cash in the short term, it only adds another unnecessary expense in the future.
Now what: Sears' prospects have been fading for a long time. The stock's slide has been volatile, but the downward slope has remained over the last five years. Investors have pointed to the company's assets in its brand-name properties and real estate holdings, but most of those have been spun off by now and the core brand has only gotten worse.
In fiscal 2015, the company's operating loss hit $1.6 billion, but CEO Eddie Lampert continues to tout the importance of its rewards program and other initiatives that are unlikely to reverse the decline. Big-box retailers across the board are struggling, but Sears has bungled in neglecting its brand and basic retail concepts like store maintenance, which has turned customer perception sour.
At this point, Sears' outcome seems terminal. Comparable sales can only fall for so long before the business implodes, and with over $6 billion in debt and little cash on the books, there is little liquidity left.
Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.