Sears plunges 6% on weak holiday sales, lowered Q4 EPS guidance

Posted Jan 14th 2008 3:03PM by Joseph Lazzaro
Filed under: Earnings Reports, Bad News, Sears Holdings (SHLD)

Sears Holdings' shares plunged $6.90 to $89.39 Monday at mid-day after the company announced that same store sales for the holiday period fell 3.5% and that Q4 earnings could be about 50% of last year's Q4 profit.

Sears (NASDAQ: SHLD) now expects to earn $2.59-$3.48 per share for Q4 F2007. The Reuters Q4 F2007 consensus estimate is $4.43. Sears earned $5.33 per share during Q4 a year ago.

Sears said for the 9-week period ended January 5, same store sales fell 2.8% at Sears stores and 4.2% at Kmart stores. The company cited increased competition, the housing sector's slowdown, and consumer credit concerns as reasons for the sales shortfall.

Another SHLD disappointment

Analyst C. Leonard Bauer told BloggingStocks on Monday that Sears' announcement will not do much to increase Wall Street's low confidence in the company's prospect, at least short-term.

"It's just another Sears disappointment," Bauer said. "Some of the [holiday] shortfall can be attributed to economic conditions, but not the entire shortfall." Bauer added that he does not own shares of Sears Holdings.

Bauer said Wall Street will now "likely remove any remaining premium allocated to Sears' shares." He said a prudent store closure plan, and the fact that Sears is led by hedge fund manager Eddie Lampert, created optimism behind the shares, and a "Sears premium."

But Lampert and Sears have not been able to deliver to-date -- posting seven consecutive quarters of sales declines at both Sears and Kmart, and the Street has not responded favorably -- taking shares down from 2007 highs above $190 to the current $90-range.

Sears Holdings (NASDAQ: SHLD)