Stock of the Day
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Sears Holdings Corp. (SHLD)
Sears Announces a Shocking $94 Million Loss
Sears Holdings Corporation, the parent company of Sears and Kmart stores, appeared to be in a solid position. The company turned around in the first quarter, posting a profit and beating expectations, and analysts were expecting a profit around 35 cents per share for the second quarter. The announcement this morning from Sears, however, was far from what analysts and investors were expecting; and unfortunately, this wasn't a pleasant surprise. How bad where the results, and what caused such a dramatic turn of events?
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| Stock Analysis |
Not including one-time items, analysts were expecting a profit around 35 cents per share, and were pretty optimistic that Sears would achieve this. However, analysts were stunned when Sears revealed a loss of 79 cents per share, which even after excluding one-time items was still a loss of 17 cents per share. Revenue dropped 10% to $10.55 billion, and worked out to a net loss of $94 million. Same-store sales dropped 12.5% at Sears stores, and 3.9% at Kmart locations.
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Although this loss may have been unforeseen, the company has been able to pinpoint the major areas which contributed to its poor performance. There were large one-time fees racked up due to the costs of closing multiple store locations, as well as fees associated with severance and pension plans. Furthermore, the retail sector has been volatile, and two of Sears' major departments (home furnishings & supplies, and clothing) are areas where customers are more likely to reduce their spending when the economy is down. At this point, there is no way to predict how Sears will do in upcoming months. There was hope that Sears might have even beaten expectations or improved its outlook, as a number of retail companies (including Wal-Mart (WMT: Charts, News, Offers), Macys (M: Charts, News, Offers), and J.C. Penney (JCP: Charts, News, Offers)) have done in the past weeks. But for now, we must wait for Sears to come up with a plan, and do its best to catch up with its competitors.
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Sears Commentary:
Note to Sears: Nobody Needs More Stuff - Recollecting a recent trip to a Sears store, this individual comes to the realization that purchasing trends in America are changing, and gives some suggestions for Sears to reinvent itself.
Sears reports a surprise loss; could be in for a long day - Reminiscing on Sears Holdings' earnings report, this individual speculates how investors will respond; and the news isn't pretty.
Sears, Kmart offer Christmas Club card to help shoppers budget - Earlier this week, Sears Holdings released a Christmas Club card, which allows customers a way to earn extra rewards to spend at Sears stores. Will this program help boost Sears' holiday sales?
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Home dining boosts Heinz and Hormel - Heinz (HNZ: Charts, News, Offers) and Hormel (HRL: Charts, News, Offers) each made headlines today with better than expected earnings, as consumers curbed their dining out habits, and instead bought more products to eat at home.
Deere posts 27 pct decline in 3Q profit - Deere & Co. (DE: Charts, News, Offers) managed to beat expectations despite a 27% drop in profits, but does the company expect things to get any better in the future?
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Profile |
Click here to view a detailed profile of Sears Holdings Corp..
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