Sears Holdings Corp (NASDAQ: SHLD)
Sears Holdings is having an incredibly strong start to the trading session today, and for good reason. In the pre-market, news broke that the company would be moving forward with massive cost cutting initiatives. As a result, we saw incredibly strong pre-market growth. Now, with the market open, the stock has dropped a bit, but is still holding onto pretty impressive gains. Below, we’ll talk about what we’re seeing from SHLD, why, and what we’ll be watching for ahead.
What We’re Seeing From SHLD
As mentioned above, Sears Holdings is having an incredibly strong day in the market today. After announcing major cost cutting initiatives, the stock started to run in pre-market hours. When the opening bell rang, it was already trading on impressive gains. While we have seen some downward movement in the first 5 minutes here, the stock is still on strong gains. At the moment (7:43), SHLD is trading at $7.43 per share after a gain of $1.89 per share or 34.12% thus far today.
Why The Stock Is Up
As is almost always the case, our partners at Trade Ideas were the first to inform us of the gains on SHLD. As soon as they did, the CNA Finance team started digging to see what was causing the movement. It didn’t take long at all to uncover the story. The gains are the result of a company update.
Early this morning, the company announced strong operating performance for Q4, but more importantly, outlined actions to drive profitability. The company will be working to improve on liquidity and financial flexibility, restructure and streamline operations, improve operational performance, and cut costs. The big news being the cost cutting. In fact, Sears Holdings plans to cut $1 billion in annualized costs. In a statement, Edward S. Lampert, Chairman and CEO at SHLD had the following to offer…
“We significantly improved our operating performance and made progress toward profitability in the fourth quarter of 2016. In the first several weeks of 2017, we undertook a series of transactions to optimize our capital structure and unlock value across our wide range of assets. We also reached an agreement to amend our asset-based credit facility which further enhances our liquidity and financial flexibility. Furthermore, we intend to use net proceeds from our announced Craftsman and real estate transactions, as well as from improvements in the operating performance of the Company, to meaningfully reduce our outstanding obligations and their associated expenses.
To build on our positive momentum, today we are initiating a fundamental restructuring of our operations that targets at least $1.0 billion in cost savings on annualized basis, as well as improves our operating performance. To capture these savings, we plan to reduce our corporate overhead, more closely integrate our Sears and Kmart operations and improve our merchandising, supply chain and inventory management.”
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will be keeping a close eye on SHLD. In particular, we’re interested in learning more about the company’s restructuring plans and cost cutting strategies, as well as following them through the process. Nonetheless, we’ll keep a close eye on the news and bring it to you as it breaks!
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