What happened
Sears Holdings Corp (SHLDQ) was plumbing new all-time lows again yesterday as investors continued to react to news that CEO Eddie Lampert was resorting to his own hedge fund to give the retailer a much-needed cash injection.
As a result, the stock finished the day down 6.8%.
Image source: Sears.
So what
Sears shares have been in free fall since the company reported last week that Lampert made a non-binding proposal to the company to buy the Kenmore appliance brand for $400 million and SHIP, Sears' home improvement business, for another $80 million.
The move, which came during a market panic about other department store earnings reports, added to concerns about Sears' cash burn and its looming bankruptcy, and also to suspicion that Lampert, who is CEO, Chairman, and both the biggest shareholder and lender in the company, is raiding Sears' assets for his own benefit.
Since Sears reported the proposal, the stock has lost a third of its value over the last four sessions.
Now what
Concerns about Sears' and Lampert's funding arrangement come while its earnings report is also due out at the end of the month, and investors may be worried that the retailer is going to report another massive loss.
Department store stocks mostly sold off after last week's round of earnings reports even though retail sales have been strong and comparable sales rose across the industry.
Sears won't be so lucky to see comps improve, but the company could still top estimates. Analysts are expecting revenue of $2.91 billion, down a third from the year before. There were no earnings estimates available, but after turning in a loss of $4.62 per share in the first quarter, Sears is likely to report another bloodbath for the second quarter.
