Why Sears Holdings Corp. Dropped 17% in January

The once-iconic retailer is being annihilated by the competition.

Joe Tenebruso
Joe Tenebruso
Feb 12, 2016 at 5:11PM
Consumer Goods

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What: Shares of Sears Holdings (NASDAQOTH:SHLDQ) fell 17.6% last month, according to data provided by S&P Global Market Intelligence. The retail giant is accelerating its store closures in a desperate attempt to remain viable.

So what: Sears has seen its business decimated by an onslaught of competition. E-commerce juggernaut Amazon.com is a merciless rival, offering shoppers a value proposition -- based on a larger selection of goods, lower prices, and more convenient shopping experience -- that Sears simply can't match.

In addition, Sears-owned Kmart, which competes mostly on the basis of price, finds itself in an unwinnable battle with low-cost titan Wal-Mart. The retail king's massive scale, best-in-class distribution system, and hefty clout with its suppliers allows Wal-Mart to profitably offer goods at low price points -- something Kmart was once known for but has struggled to do consistently in recent years.

Throw in intense competition from the likes of dollar stores, home-improvement retailers, and electronics chains and Sears is simply being overwhelmed and outmatched.

Now what: Unfortunately for Sears -- and its shareholders -- this competition is only likely to intensify in the years ahead.With losses piling up and its cash reserves dwindling, Sears Holdings may be nearing its end.