Sears Holdings Corp (Nasdaq: SHLD) failed to provide a light at the end of the tunnel for investors on Thursday, reporting widening losses and yet another quarter of double-digit sales declines. Analysts say it’s difficult to make a bull case for SHLD stock at this point.
Sears reported a first-quarter earnings per share loss of $3.93 on $2.9 billion in revenue. Revenue was down 30 percent from a year ago but was mostly in-line with consensus analyst estimates of $2.86 billion. However, analysts were expecting only $1.51 in per-share losses.
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Despite aggressively closing its worst-performing Sears and Kmart locations in recent years, same-store sales tumbled 11.9 percent in the first quarter after falling 15.6 percent in the previous quarter. Analysts had been expecting a 9.3 percent decline.
Total net loss for the first quarter was $424 million, and Sears ended the quarter with $466 million in cash reserves. The company has now used $994 million of its $1.5 billion revolving credit facility that is due in 2020.
CEO Eddie Lampert says Sears is sticking to its plan.
“In a challenging quarter, we continued to focus on our strategic transformation, identifying additional opportunities to streamline operations and adjust inventory and operating expenses while staying focused on our Best Members, Best Categories and Best Stores,” Lampert says in a statement.
Sears also announced it will close an additional 70 stores in 2018.
SHLD stock traded more than 10 percent lower in premarket trading Thursday, and is set to open at less than $3 per share. The stock gained ground in recent weeks after the company said it is once again exploring the sale of its Kenmore appliance brand and other parts of its home services business.
Bloomberg Intelligence analyst Noel Hebert says the positive market reaction earlier in the month was surprising considering Sears previously shopped the same assets two years ago.
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“Perhaps the shares are rallying on the prospect that this signals a beginning of the end and, in turn, limits the amount of enterprise value that is getting bled out via operating losses,” Hebert said. “When you’ve got assets tied to a business in perpetual decay, selling now is almost certainly better than selling later.”
Even after the May gains, SHLD stock remains down 92.5 percent in the past three years.
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Sears Holding Corp. (SHLD) Can’t Stop the Bleeding, Will Close More Stores originally appeared on usnews.com
