Sears Holdings Reports 99 Pct Profit Plunge vs Oversold Stochastics

Sears Holdings Corporation (SHLD) reported earnings this morning.  It reported net income declined to $2 million, or a penny per share, from $196 million, or $1.27 per share, a year ago.   Sears blamed the weaker sales on increased competition, less consumer spending because of the weak housing market and growing credit concerns and unseasonably warm weather, which hurt sales of apparel and other seasonal merchandise.  Aylwin Lewis, Sears Holdings’ chief executive and president said:  “We are very disappointed in our performance for the third quarter. We cannot blame our results entirely on the retail and macro-economic environments. We have much on which to improve and are working hard to do so.”

Okay there’s a huge difference between a $2 million profit and a $196 million proft.  That’s almost a loss.  Terrible is an understatement.  It closed yesterday at $116.32.  In pre-market trading, shares plunged to below $100 before rebounding.  It has rebounded a bit and as I am writing this post, it is currently trading at $103.00 in pre-market trading.  I am bearish on this company in general.  $15 bln market cap?  In my opinion, the company is a mis-managed wreck that needs to do some restructuring - it can start by giving up in the apparel department. 

The stock had its day of Jim Cramer, CNBC, and “it has real estate value” hype.  I think it has a long way to go down.  But this is where it gets interesting.  Stochastics say it is due for a bounce off oversold conditions.  Bad fundamentals versus oversold chart.  Which will win?  In the longer term, fundamentals.  For today, it should be good for a daytrade both ways.

JCP:  It’s gonna be caught in some of the morning downdraft but hopefully the market will realize that Sears’ problems are just that, Sears’ problems.