What to Expect When Sears Reports Q3 Earnings

Chris Lange

Sears Holdings Corp. (NASDAQ: SHLD) is scheduled to release fiscal third-quarter earnings report before markets open on Thursday. The consensus estimates from Thomson Reuters are calling for a net loss of $4.06 per share on $4.95 billion in revenue. The same period from last year had a net loss of $2.98 per share and $5.75 billion in revenue.

There have been rumors Sears will close its Kmart division. Sears has denied them as it continues to close scores of stores. Moody’s has observed Sears cannot survive without outside capital. The situation is dire enough that poor holiday results will likely ruin the company, which was formed in 2005.

Eddie Lampert, who created Sears Holdings via a merger of Sears and Kmart, is the only financial lifeline the company has had recently. He has sold off brands and continues to try to leverage the company’s real estate portfolio. However, the best measure of Sears is its stock price, which is down significantly in the last five years.

The company has not been profitable since 2010, and its fiscal 2015 revenue is less than half of what it was a decade ago. It lost almost $4 billion over the past three years. In the most recent quarter, it lost another $900 million.

All the financial engineering in the world won’t save Sears. It is locked in competition with other desperate retailers like J.C. Penney, which also needs good holiday numbers. Worse, it has to pull customers from business leaders such as Walmart and Amazon.

During this quarter the company also announced that it has promoted Senior Vice President Jason Hollar to CFO, effective immediately (in mid-October). Not exactly fresh blood, as Hollar has been a part of the Sears financial team since October of 2014.

Excluding Wednesday’s move, Sears has underperformed the broad markets with the stock down about 43% year to date.

Shares of Sears were last trading up about 2.5% at $12.07, with a consensus analyst price target of $9.00 and a 52-week trading range of $10.50 to $22.93.