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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