Sears Holding Corp. is ending the year on a bitter note. The company, which earlier this week posted a list of 79 out of the up to 120 Sears and Kmart stores it plans to close and was then downgraded by Fitch Ratings, is now watching its stock bleed out to a new low.
In mid-day trading in New York, the beleaguered retailer’s stock was down to $32.20, heading for its fourth straight daily drop and less than half of the year-earlier price of $74.15.
1. Why did Fitch downgrade the company? Specifically, what was the downgrade?
2. Explain what Sears may have to restructure, besides closing stores.
3. Based on the article, what are the projections for the 4th quarter earnings?
4. Calculate the percentage drop in the stock price.
Staff (2011). Sears, Kmart Closings: Shares Slide To New Low On Fitch Downgrade, Los Angeles Times, Dec. 30 (Retrievable online at http://latimesblogs.latimes.com/money_co/2011/12/sears-kmart-closings-shares-slide-to-new-low-on-fitch-downgrade.htmlhttp://latimesblogs.latimes.com/money_co/2011/12/sears-kmart-closings-shares-slide-to-new-low-on-fitch-downgrade.html)
NBC Video (2011). More than 100 Sears and Kmart Stores to Close, Dec. 27.