Back to top

Analyst Blog

On Jun 20, 2014, we issued an updated research report on Sears Holdings Corporation (SHLD - Analyst Report).

Sears Holdings is finding it increasingly difficult to stabilize as it continues to grapple with deteriorating top and bottom lines. The beleaguered retailer reported a huge loss for the first quarter of fiscal 2014 as it failed to attract customers despite providing huge discounts on merchandise. The company’s first quarter adjusted loss widened to $2.24 per share against a loss of $1.36 in the year-ago comparable quarter.

Revenues declined 6.8% to $7,879 million compared with $8,452 million in the year-ago quarter. The persistent sluggish performance at its Sears Domestic and Kmart stores – owing to Wal-Mart and dollar stores’ aggressive pricing and expansion strategies – are drags on the company’s top-line results.

However, we commend Sears Holdings’ efforts to improve its financial performance and liquidity position through various strategic measures. One such major initiative taken by the company is transforming its business model, which we believe will help in stabilizing its declining sales.

Sears Holding, which currently sells products through store-based networks, is looking for opportunities to transform its business to a member-centric model through its Shop Your Way program. As part of this remodeling initiative, the company is heavily investing in its Shop Your Way program while strategically reducing its store count and divesting its underperforming businesses.

Moreover, the company is focused on cost containment, inventory management and merchandise enhancement initiatives to inflate margins. The company’s strategy of capitalizing on opportunities and returning to profitability through its simplified organizational structure and new operating model are also encouraging.

Sears Holdings currently has a Zacks Rank #3 (Hold).

Other Stocks to Consider

Better-ranked stocks worth investing in the retail industry include Conn’s, Inc. (CONN - Snapshot Report), V.F. Corporation (VFC - Analyst Report) and Five Below, Inc. (FIVE - Snapshot Report), each carrying a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.80 +7.04%
BANCO DO BR… BDORY 14.74 +5.66%
AIR INDUSTR… AIRI 9.99 +4.15%
EQT MIDSTRE… EQM 98.14 +3.38%
WEATHERFORD… WFT 23.64 +3.10%