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Sears (SHLD) Stock Plummets 12% After SEC Filing Clouds Future
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When was the last time that you stepped foot in a Sears retail store? Customers might find themselves unable to locate their familiar Sears store soon.
Shares of Sears Holdings Corporation (SHLD - Free Report) closed the day with 12% drop to $7.98 per share after the parent company of Kmart and Sears raised doubts about its ability to continue operating in their filing with the SEC on Tuesday.
The department store mentioned its efforts to cut cost, and sell properties and brands in order to close the gap of its losses. The company reported a $2.2 billion loss for last year and said that it had to use money from its investments and financing activities to fund operations. The company hasn’t reported an annual profit since 2010.
In its effort to minimize the red, Sears announced in January that it had sold their Craftsman brand to Stanley Black & Decker (SWK - Free Report) . Sears received an initial upfront payment of $525 million and will receive another $250 million in three years. In February, Sears started a restructuring program that it believes would save $1 billion annually. The New York Times reported that the focus of the program would be on streamlining its back-office corporate and support functions.
Sears Chief Financial Officer Jason Hollar tried to calm its investors in a company blog post on Wednesday. Hollar said the comments quoted by the media are regulatory standards to assess and disclose potential risks, but it doesn't reflect the management’s financial plans and forecast.
“(These) reports do not include the full disclosure which highlights the action we are taking to mitigate those risks,” said Hollar. "As 2016 proved to be another challenging year for most of the brick-and-mortar retailers, our disclosures reflected these developments."
Mr. Hollar is right. As customers’ shopping behavior and pattern shift to online, many of the big brick-and-mortar companies have not been doing well or are out of business.
In May 2016, Sports Authority filed bankruptcy and announced that it would close all of its 450 stores across the United States. J.C. Penny is set to close 138 stores by the second quarter. Macy’s (M - Free Report) looks to close 68 stores. Foot Locker (FL - Free Report) plans to shut down 100 stores in 2017. Sears is closing a total of 150 stores this spring, including 108 Kmart and 42 Sears stores.
In the wake of online shopping, traditional retailers didn’t know what to do at first to win back customers from e-commerce giant Amazon.com (AMZN - Free Report) . Some of the big retailers like Target (TGT - Free Report) , Best Buy (BBY - Free Report) and Wal-Mart (WMT - Free Report) have figured out that price-cutting isn’t the only way.
The leading retailers are investing in reinventing their stores, training their sales associates and store management, and expanding online operations.
While both Wal-Mart and Target are Sears’ competitors, their success can surely act as guidelines for Sears in the future.
Stocks that Aren't in the News…Yet
You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015, with a stellar average gain of +26% per year
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Sears (SHLD) Stock Plummets 12% After SEC Filing Clouds Future
When was the last time that you stepped foot in a Sears retail store? Customers might find themselves unable to locate their familiar Sears store soon.
Shares of Sears Holdings Corporation (SHLD - Free Report) closed the day with 12% drop to $7.98 per share after the parent company of Kmart and Sears raised doubts about its ability to continue operating in their filing with the SEC on Tuesday.
The department store mentioned its efforts to cut cost, and sell properties and brands in order to close the gap of its losses. The company reported a $2.2 billion loss for last year and said that it had to use money from its investments and financing activities to fund operations. The company hasn’t reported an annual profit since 2010.
In its effort to minimize the red, Sears announced in January that it had sold their Craftsman brand to Stanley Black & Decker (SWK - Free Report) . Sears received an initial upfront payment of $525 million and will receive another $250 million in three years. In February, Sears started a restructuring program that it believes would save $1 billion annually. The New York Times reported that the focus of the program would be on streamlining its back-office corporate and support functions.
Sears Chief Financial Officer Jason Hollar tried to calm its investors in a company blog post on Wednesday. Hollar said the comments quoted by the media are regulatory standards to assess and disclose potential risks, but it doesn't reflect the management’s financial plans and forecast.
“(These) reports do not include the full disclosure which highlights the action we are taking to mitigate those risks,” said Hollar. "As 2016 proved to be another challenging year for most of the brick-and-mortar retailers, our disclosures reflected these developments."
Mr. Hollar is right. As customers’ shopping behavior and pattern shift to online, many of the big brick-and-mortar companies have not been doing well or are out of business.
In May 2016, Sports Authority filed bankruptcy and announced that it would close all of its 450 stores across the United States. J.C. Penny is set to close 138 stores by the second quarter. Macy’s (M - Free Report) looks to close 68 stores. Foot Locker (FL - Free Report) plans to shut down 100 stores in 2017. Sears is closing a total of 150 stores this spring, including 108 Kmart and 42 Sears stores.
In the wake of online shopping, traditional retailers didn’t know what to do at first to win back customers from e-commerce giant Amazon.com (AMZN - Free Report) . Some of the big retailers like Target (TGT - Free Report) , Best Buy (BBY - Free Report) and Wal-Mart (WMT - Free Report) have figured out that price-cutting isn’t the only way.
The leading retailers are investing in reinventing their stores, training their sales associates and store management, and expanding online operations.
While both Wal-Mart and Target are Sears’ competitors, their success can surely act as guidelines for Sears in the future.
Stocks that Aren't in the News…Yet
You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015, with a stellar average gain of +26% per year
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