Sears Holdings (SHLD) Stock: Gaining Big On Shrinking Losses

Sears Holdings Corp (NASDAQ: SHLD) is having an overwhelmingly strong start to the trading session this morning, and for good reason. The company reported its financial results for the third quarter, beating expectations and narrowing the loss. Today, we’ll talk about what we saw from earnings, what we’re seeing from the stock, and what we’ll be watching for ahead.

What We Saw From The Report

As mentioned above, Sears Holdings is having a pretty strong start to the trading session, and for good reason. The company released its earnings for the third quarter this morning, blowing away expectations. Here’s what we saw from the report:

  • Net Loss – In terms of net loss, SHLD did pretty well. During the quarter, the company reported a net loss of $558 million. That works out to $5.19 per share. That’s an incredible decline from the loss of $748 million or $6.99 per share in the same quarter last year.
  • Revenue On The Down Turn – On the revenue side, we saw a bit of a decline. During the quarter, SHLD generated revenue in the amount of $3.66 billion. That’s a big drop year-over-year from $5.03 billion. Nonetheless, the store closures that led to the narrowing losses are also the reason fro declining overall revenue.
  • Same-Store Sales – Same store sales also saw a big decline as the result of the store closures. Overall, same-store sales fell by 15.3%, with Kmart stores seeing a 13% drop and Sears stores seeing a 17% drop.

In a statement, Edward S. Lampert, Chairman and CEO at Sears Holdings, had the following to offer:

In the third quarter, we continue to narrow our losses and delivered another quarter of Adjusted EBITDA improvement of at least $100 million. With the challenging retail landscape continuing to pressure sales, the improvement in Adjusted EBITDA is reflective of the success of the strategic priorities we outlined earlier this year to streamline our operations, reduce inventory and minimize operating expenses, as well as our commitment to our goal of restoring positive Adjusted EBITDA in in 2018. Our Shop Your Way membership program and Integrated Retail Strategy remain a key focus for us in order to meet the needs of our members and provide our members with the best experience possible throughout the holiday shopping season.”

How The Stock Reacted To The News

As investors, one of the first things that we learn is that the news moves the market. The news released by SHLD proved to be overwhelmingly positive. Sure, we saw declines in revenue and same-store sales, but that was the result of store closures. All in all, the drastic reduction in net loss proved to be an overwhelmingly positive bit of data. As a result, we saw gains in the value of the stock. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:09), SHLD is trading at $5.30 per share after a gain of $1.09 per share (25.89%) thus far today!

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on SHLD. In particular, we’re interested in following the company’s continued efforts to restructure and improve sales and margins at the remaining stores and online. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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