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Here's Why Sears Holdings Corp. Screamed to a New Post-Merger Low

One hundred dollar bill burning.
One hundred dollar bill burning.

Image source: Getty Images.

Now what

This is a pretty grim forecast, and there's simply nothing suggestive from its third-quarter report that investors should expect a turnaround anytime soon. Sears reported a Q3 loss of nearly $7 per share, marking its fifth-consecutive quarterly loss. It also witnessed revenue dive $721 million, to $5 billion, from the prior-year period, as comparable-store sales at Sears and Kmart dipped 7.4% and 4.4%, respectively.

Perhaps the only recent ray of sunshine for Sears is the impending divestiture of its Craftsman brand to Stanley Black & Decker (NYSE: SWK) for $900 million. The deal should allow Stanley Black and Decker to market what's arguably Sears' most prized asset in a number of department stores, while it gives Sears another much-needed cash infusion to help it attempt to navigate the waters in 2017.

However, the real issue here is that cost-cutting isn't a growth strategy, nor is it a means by which Sears can necessarily save itself. Smart long-term investors would be wise to keep a very safe distance from Sears Holdings' stock, which may not survive the year.

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Sean Williams has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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