March 9, 2017
Well, the results are in, and it looks like Sears Holding Corp. (SHLD) didn't do quite as badly as expected during the fourth quarter. Shares of SHLD rallied after the department store chain beat expectations. Sears was one of the worst performing stocks of 2016—could it be the biggest comeback story of 2017? Let's take a look.
As a refresher, Sears is a retailer that operates in the United States and Canada. The company's brands include Kenmore and DieHard. The company also owns Kmart, which sells brands like Joe Boxer and Jaclyn Smith. The company employs 178,000 full-time employees, and brought in $22 billion in revenue last year.
In recent years, though, Sears has been through some tough times. It has been forced to downsize in terms of store count and its workforce. And Sears' recent earnings report demonstrated that it isn't likely going to turnaround any time soon.
Last quarter, Sears reported a net loss of $607 million, or a loss of $5.67 per share. Excluding special items, the adjusted net loss per share was $1.28. Now, this was significantly better than analysts' estimates of a loss of $2.85 per share.
Meanwhile, Sears continued to lose sales. Compared with the year ago quarter, sales fell nearly 18% to $6.05 billion. Again, this topped analysts' estimates of $5.89 billion in revenue, but not by much. Sales at stores open a year or longer slid 10%.
And, the fact remains that Sears is expected to continue posting negative sales and earnings over the next several quarters. In February, the retailer announced that it would close 150 stores. The company has also been forced to sell its popular Craftsman Brand to Stanley Black & Decker.
For these reasons and more, SHLD is an F-rated Strong Sell in Portfolio Grader. In this case, beating analysts' estimates just won't cut it, in my book.