Shares of Sears Holdings Corp. and J.C. Penney Co. Inc. continue to decline following Wednesday’s negative sentiment.
Sears saw its shares decline 8.4 percent to $26.43 in Nasdaq trading shortly after noon time as investors continue to have a lack of confidence about the retailer’s future. Although the company said a report Wednesday about a vendor electing to stop shipping to the retailer was untrue, investors apparently had other concerns about the company’s finances and liquidity issues down the road. That said, the company has $6.5 billion in inventory in which the bulk has already been paid for, and should be in decent position for the holiday selling season. What happens regarding orders set to ship in January could be determined next month when Sears discloses whether it successfully completes the planned rights offering for its Sears Canada ownership stake. That plan is expected to raise $380 million.
At Penney’s, the decline was 6 percent to $7.70 in Big Board trading. Wednesday’s fall out was due to the retailer’s disclosure at Wednesday’s analyst day that September comparable-store sales was lower than expected for its back-to-school sales, prompting Penney’s to revise third-quarter earnings guidance downward. Focusing on the guidance revision also meant that investors largely ignored some of the positive initiatives planned by Penney’s executives: expansion of locations in smaller markets; expansion of women’s footwear as a category, as well as handbags, and growth in Internet sales, which had been ignored by the prior management team.
In a broader look at the markets, the Dow Jones Industrial Average was down 1.6 percent to 16,717.24, while the S&P 500 Retailing Industry Group slipped 1.2 percent to 925.60. The past week has seen some volatility after a summer of relative calm. Investors are also watching for signs of global growth, and finding that the International Monetary Fund has cut its global economic outlook for this year and next. The IMF cited weakness in Europe, as well as in Japan and Latin America.