Stock to Sell #5: SHLD
Sears Holdings (NASDAQ:SHLD) just keeps reporting lower sales and profits. With its poor customer service and consumer concerns about the quality of its appliances and other onetime A-level items, the retailer is on a downward path.
CEO Eddie Lampert has been scrambling to raise cash and calm investor fears, and he does have a history of igniting investor interest from time to time. To stay afloat with enough cash flow, Sears has been trying to sell or spin off stores. One well-respected Wall Street analyst called the process “a controlled liquidation of its chain,” and I agree. While the move sent SHLD soaring more than 20% and put rumors of bankruptcy to rest, in the end, Sears looks to be on its way to another cash-flow crunch.
You can’t run a business by selling off assets. Sears needs to address its fundamental problems and find a buyer that can provide synergistic upside. Meanwhile, the company has too big of a struggle ahead at a time of high unemployment, shrinking credit and competitors doing a better job both online and in big-box stores.