Sears Holdings stock price drop cost the company’s CEO a fortune. Sear Holdings CEO Edward Lampert, a billionaire doubled his share in the company to 31.3 million shares. Lampert remains the second-largest shareholder. But he has the largest exposure to the variations in Sears Holdings stock price. In addition, he lost $35 million in a one day sell-off recently. Sears Holdings stock price is down nearly 95% from its peak 10 years ago.
Sears Holdings stock price fell 12 percent after the company said it is struggling to stay in business. USA Today believes Lampert’s Sears stock dropped by $510 million since the end of 2014. The CEO has been unable to turn Sears around. Sears Holdings stock price is a reflection of this. Poor sales is part of the reason.
Lampert planned to increase the cash flows of both Sears and Kmart when the two merged about 12 years ago. His hedge fund took a hit from its Sears investment too.
Sears Holdings’ balance sheet has bled for several years. Competition from the physical stores like Walmart and online retailers like Amazon pressured Sears. But internet, in general, consumers see the company as outdated and out of step with current tastes. Plus, it merged with Kmart which combined to retail chains in dire straits.
The companies latest earnings reflect its struggle. CEO Edward S. Lampert said the following in the latest earnings report: “We remain fully committed to restoring profitability to our Company and are taking actions such as reducing unprofitable stores; reducing space in stores we continue to operate (including through the Seritage lease arrangement); reducing investments in underperforming categories; improving gross margin performance; and managing expenses relative to sales in key categories.
While many observers have acknowledged the significant asset base of our Company, we understand the concerns related to our operating performance and are committed to transforming our Company through our Shop Your Way membership program and our Integrated Retail investments.
At the same time, we will continue to explore options to recognize the inherent asset value in a manner that complements our transformation.”
It looks as though the company’s “transformation” will lead to miniature version of its former self – a shadow of the retail giant it once was.
Plus, the latest financial figures support Saunders. “Revenues decreased approximately $721 million to $5.0 billion for the quarter ended October 29, 2016, compared to revenues of $5.8 billion for the quarter ended October 31, 2015. The year-over-year decline in revenues was primarily driven by having fewer Kmart and Sears stores in operation, which accounted for $323 million of the decline, as well as a 7.4% decline in comparable store sales during the quarter, which accounted for $304 million of the revenue decline.”
Sears Holdings Stock Price Influenced By Debt
The most significant part of the report is the revenue drop. The $800 million year-over-year revenue loss shows the company’s chronic problems. These issues are manifold. The company may stay on this downward spiral for the near future. It may face difficulty maintaining its current operational level.
Source: USA Today