NEW YORK, January 24, 2013 /PRNewswire/ --
Sears Holdings Corporation (NASDAQ: SHLD) [Full Research Report](1) recently announced the resignation of CEO Lou D'Ambrosio, whose his two-year term continued the company's five consecutive years of declining revenue. The new CEO, Edward S. Lampert, has increased his stake from 56.2% to 56.5%, causing the stock to rise 41% over the last 12 months. Morningstar analyst Paul Swinand comments on the rise on the stock, "[Lampert]'s buying again so it builds confidence and fear for anyone who is short the stock." Lampert is designated to take over the position of CEO on February 2.
The company's earnings have been steadily declining at a rate of 37% annually for the last five years. With a negative cash flow of -$248 million and a profit margin of -7.1% in the last 12 months, the company's earnings per share for the fiscal year ending in January 2013 are expected to be around -$2.64, and next year's earnings per share are projected lower at -$3.60 per share. While the company's stock may be rising now due to Lampert's increased stake in the company, the stock price should continue its declining state as the company continues to lose money and as the rate of negative earnings growth increases.
Former CEO D'Ambrosio had previously worked at a telecommunications company called Avaya and International Business Machines, and with his experience, he boosted the company's ecommerce initiatives. Sears and its competitor, JCPenney, have lost half of their market share to Amazon, the online retailing giant. This showed the crucial need for improved ecommerce efforts from the company, and eventually led to the launch of ShopYourWay.com, the company's free membership program and shopping community.
However, the company's revenue and earnings have continued to decline since ShopYourWay was launched in 2009. In an effort to elevate the ShopYourWay program, the company now plans to release two new celebrity brands featuring music icons Adam Levine and Nicki Minaj. The new clothing lines will be launched using the ShopYourWay.com platform and they will also be available at select Kmart stores before the end of 2013. Seeing that these celebrities are highly popular among the youth, we can see how Sears is now trying to penetrate a younger demographic that's highly interested in pop culture and online shopping.
Nevertheless, Sears must continue to find ways to turn the tides around for the company. It must learn how to regain its market share and it must remain competitive alongside other retailers. A writer at Forbes comments, "If [Lampert] can get the leadership team aligned, and keep them aligned, his chances of success are much higher. He'll have the best chance if he can stay true to his vision."
(1) The Full Research Report on Sears Holdings Corporation - including full detailed breakdown, analyst ratings and price targets - is available to download free of charge at: [http://www.nationaltradersassociation.org/r/entire_report/a84e_SHLD]
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SOURCE National Traders Association