Shares of the beleaguered Sears Holdings Corp. continued to fall Tuesday, retreating 13.2 percent to $5.66 as investors worried over the retailer’s finances.
The stock drop left Sears with a market capitalization of just $606 million — a pittance for a company with sales of the past four quarters of more than $23 billion.
So far, Sears has lost 39.1 percent of its value this year, logging declines in 14 out of 25 trading days, and repeatedly setting new all-time lows.
Warning signs have been flashing steadily at the retailer and investors were particularly active on Tuesday, trading 3.1 million shares of the company, up from the 1.4 million average.
On Monday, the stock fell 5.2 percent as investors digested a report that it was becoming more expensive to insure the firm’s bonds against default.
Last week, the company’s second-largest shareholder, Fairholme Funds Inc.’s Bruce Berkowitz noted in his letter to his shareholders: “Focusing on tangible assets has served us over many years, but most believe Sears to be the exception to the rule. Disruptive technologies; near-zero cost of capital; and few, if any, legacy obligations provide young competitors with great advantages over old-line operators.”
Critics of the Sears and its controversial chief executive officer, and primary architect, Edward S. Lampert, have said the company has underinvested in its retail business which has been supported by repeated cash infusions and asset sales.
In late January, Fitch Ratings projected the retailer would burn through $1.6 billion in cash in 2016 and $1.8 billion in 2017. The debt watchdog said Sears’ comparable-store sales were trending toward an 8 percent decline for 2016 and set to drop in the mid- to high-single-digit range for 2017.
And Moody’s Investors Service reduced the retailer’s corporate family credit rating to “Caa2” from “Caa1” and also questioned the viability of its Kmart business.
Sears has said it has sufficient resources to meet its financial obligations.
A spokesman declined to comment Tuesday on the stock drop.