Why Sears Holdings' Shares Tumbled

Why Sears Holdings' Shares Tumbled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis

What: Shares of Sears Holdings were getting dumped today, falling 14% after the retailer posted dismal holiday sales.

So what: The retailer said same-store sales fell 7.4% companywide in the quarter to date, dropping 9.2% at Sears Domestic locations, 5.7% at Kmart locations, and 4.4% at Sears Canada stores. Sears management offered no commentary on the performance, but did revise its adjusted per-share loss estimate for the quarter down to $2.01-$2.98. Analysts had expected a much stronger result at a loss per share of $0.16.

Now what: Shares of Sears hit a two-year low on the news, falling below $37. They had soared to more than $80 during that period, because many investors had seen the company as an asset play due to its real estate holdings and ownership of brands such as Kenmore and Craftsman. Today's drop seems to underscore the company's operational problems, however. As a retailer, Sears has been struggling for years, and is unlikely to escape from the losses that continue to pile up. That's reason enough to expect shares to continue to fall.

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