Retailers, consumers and prices
Sears Holdings beat Wall Street expectations when it reported earnings this morning, helped by cost cuts, and the market sang its praises by sending shares up 8 percent. The streamlining isn’t over either, as the company controlled by Eddie Lampert announced plans to shutter another 24 stores.
We’re wondering about the exuberance of the market’s response, since the results still show marked same-store sales declines for the company’s Kmart and Sears, Roebuck stores and questions remain about whether the company can pull off a real turnaround in the future.
But maybe we should ask the short sellers. As of mid-February, 14.8 million shares of Sears Holdings –about 12 percent of its shares outstanding –were held short. That’s down about 18 percent in the past month, suggesting a decrease in bearish sentiment toward the stock.
Also in the basket:
Sears Holdings Corp reported a quarterly loss this morning. But the thing that left analysts like Credit Suisse’s Gary Balter scratching their heads was the company’s expectations for higher earnings before interest, taxes, depreciation and amortization (EBITDA) for the full year.
“We are struggling with what we are missing in the context of Q1 being down over $385 million in EBITDA and other comments in the release that talk about the expected difficult sales and gross margin environment,” Balter said in his research note.
Markdowns? No good for Sears. The company, controlled by Eddie Lampert, posted a surprise loss, hurt by discounts and floundering sales at its Kmart and namesake stores. Immediate respite is not in sight, Sears said, as consumers juggle higher gasoline and food prices.