Friday, March 30, 2012

Today's Major Market Move: Sears Holding (ticker: SHLD) Drops 8.3% in Past Week

Back on February 23rd, Sears Holding (ticker: SHLD) announced their third quarter results and it was a doozy. In the Christmas quarter that usually provides a windfall for retailers, Sears ended up losing over $22 a share. We thought for sure this number included at least one, if not more, extraordinary items but according to Google Finance, it does not:

We are going need to add a log() option to our stock price / eps comparison chart since this print essentially renders it useless in linear format:

Click here to go to the live chart.

Amazingly, the stock rallied 23% after the earnings announcement. We can only suspect that this was a reaction to the restructuring plans that were presented along with earnings. More from the Worcester Telegram:

Sears Holdings Corp. said Thursday it plans to raise as much as $770 million by selling 11 store sites and separating some smaller-format businesses in an effort to regain profitability and market share, after posting its largest quarterly loss in at least nine years. 
In the past two weeks, after Sears announced the closure of another 62 stores (which comes on the heels of a 120 store closure announcement at the end of last year), investor sentiment has changed. The stock has given back all of the gains from the rally that started on Feb 24th.

Click here to go to the live chart.

What is perhaps most remarkable about this entire situation is that SHLD still holds the top spot in the S&P 500 for stock performance in 2012, and by a wide margin (104% vs 66% for BAC):

Click here to go to the live table.
Astounding considering SHLD lost over $29 in the prior fiscal year. I suppose this is a testament to the faith the investor community has in Eddie Lampert's ability to right the ship. It is going to be very interesting to see in the next earnings release if the current trend of quarterly losses (now at 4 in a row and increasing in magnitude) is abated.

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