You already heard about the E.U. coming “CreditWatch Negative” outlook being handed out to the European nations by S&P. Another key downgrade came to Sears Holdings Corporation (NASDAQ: SHLD) ahead of Christmas as the retailer just cannot get it right. Moody’s Investors Service has cut the corporate credit rating deeper into junk bond territory today. The move follows a similar downgrade from ratings agency rival Standard & Poor’s last month.
Moody’s cut the rating by one notch to “B1” from “Ba3” but it also left the door open to more debt rating downgrades with a NEGATIVE outlook for Eddie Lampert and friends. S&P cut the rating to B in November.
What Moody’s cited was the lower than expected earnings results and the note that the company has not performed as its peers have. It seems that even in a recovery Sears can only manage to contract.
When Sears reported a wider loss, part of it was Canada, soft sales of consumer electronics, and even some in clothing. Even medical sales at K-Mart were said to be lagging. Moody’s did leave an out for the ratings agency to make the outlook STABLE if the company’s operating earnings manage to recovery. But the firm may downgrade Sears further if the company’s operating earnings continue to erode over the next few quarters.
Our own take is that the company went too long without a permanent CEo and then the choice was questionable at best. Sears is Eddie Lampert’s company, hands down. He is in charge, shareholders are not.
Credit ratings agency actions are not the killer that they used to be. Sears is still up almost 1% at $59.06. Just keep in mind that the 52-week trading range is $51.14 to $94.79.
JON C. OGG
Top Gaining Stocks
Top Losing Stocks