Why Sears Holdings Stock Bounced Today
Shares of Sears Holdings (NASDAQ: SHLD) were moving higher today after the ailing retailer posted third-quarter results that weren't as bad as expected. The company managed to narrow its net loss from $748 million a year ago to $558 million as it closed stores, helping to eliminate bloated operating expenses. As a result, the stock opened up 27.6%, but the gains had moderated to 5% by 11:08 a.m. EST.
While the narrower loss may be a sign that the company is moving in the right direction, the underlying performance was still atrocious. Overall comparable sales fell 15.3%, with Sears declining 17% and Kmart losing 13%. Revenue slid 27.2% to $3.66 billion, which was ahead of estimates at $3.34 billion. On the bottom line, its adjusted loss per share improved from -$3.11 to -$2.64, which also beat expectations at -$4.46.
CEO Eddie Lampert noted "a challenging retail landscape continuing to pressure sales," and he also continued to tout the company's Shop Your Way loyalty program, which has yet to show meaningful results.
Overcoming a low bar will only get Sears so far, and while the company did succeed in narrowing its bottom-line loss, that seems to be more a result of the overall business shrinking rather than a meaningful improvement in operations. Meanwhile, suppliers continue to put the squeeze on the retailer, or abandon it altogether as Whirlpool did last month.
Given the poor state of stores and fleeing suppliers, even a strong holiday season won't save the stock. I'd expect the recent gains to be short-lived.
10 stocks we like better than Sears HoldingsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Sears Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of November 6, 2017
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.