The long slow death march at Sears Holdings Corporation (NASDAQ: SHLD) is turning into a case study of what not do.  Putting a hedge fund manager in charge of a huge retailer, and then letting the company be run by another person for quite some time without deep retail experience.  Imagine if Wal-Mart Stores Inc. (NYSE: WMT) or Target Corporation began a long secular decline where the only way they could attract investors is by unloading assets here and there, shrinking their geographic footprints time after time, cutting workers endlessly, and by trying to just repurchase enough stock that the free float dwindles.  And imagine no real payments to shareholders in the form of dividends.

Fortunately for investors in retail stocks, Target and Wal-Mart are not Sears. We just featured this one as one of the worst big stock stories of 2011, but we did not call for a bankruptcy nor did we include it on our list of stocks unlikely to survive 2012.  The most recent effort to spin off Orchard Supply Hardware Stores (NASDAQ: OSH) is interesting on the surface but it is just too small to make a difference at this point.

Unfortunately, a report on the CNN Money site did note that there are rumors of a Sears bankruptcy.  That is their story rather than ours.  Still, analysts have pounded upon Sears and some see much more downside on top of the pain and suffering we have seen in recent weeks (and years).

• In early December came word that Imperial Capital issued a “underperform (SELL) rating and said that it could go down to $6.00 in the new two to three years.
• Barclays recently cited that Sears appliance market share could fall to 31% from 39% and offer a large reward for other appliance sellers.
• On December 30, Zacks put Sears on its #5 list, a list of stocks with a “Strong Sell” rating.
• On December 28 came word that Credit Suisse was maintaining and Underperform rating… with a $20 price target objective.
• Fitch also lowered its corporate credit rating in the last week of December.
• Barron’s called for the start of 2012 that Sears could lose another 80% of its value.

Sears is up 0.1% on Tuesday at $31.46 verus a new 52-week range of $31.17 to $94.97 and its market cap is now down to about $3.35 billion.  The most recent short interest was listed as 10.88 million shares as of mid-December before the latest warning.

The saga continues. The question is whether or not this turnaround can ever come to fruition. Please feel free to take the absolute yes/no anonymous poll below.

[polldaddy poll=5811971]

JON C. OGG

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