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• Sears Holdings Corp. (SHLD) Has Dropped To A 1-Month Low After Q1 Loss
• Sears Holdings Swings To Q1 Loss, Shares Plunge
• Sears Holdings Posts Loss; Stock Down 10% - Quick Facts

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We have upgraded our long-term recommendation on Sears Holding Corp. ( SHLD ) to Outperform, given its efforts to revamp its organizational structure and operating model in order to overcome its sluggish top-line performances and even weaker bottom-line results.

Despite a marginal decline of 2.8% in top line, Sears first-quarter 2012 loss per share narrowed to $0.31 from $1.34 in the prior-year period and fared better than the Zacks Consensus estimate of a loss of $0.59. The improved results were primarily driven by its ongoing cost reduction, inventory management, strengthening liquidity strategies and merchandise initiatives. Moreover, adjusted EBITDA margin expanded 150 basis points to 2.1% from 0.6% in the prior-year quarter.

Apart from this, Sears has been focusing on improving margins through leverage on buying and occupancy expenses. Further, we believe lowering its stake in Sears Canada will strengthen its liquidity position while boosting future growth prospects.
 
SEARS HLDG CP (SHLD): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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