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Did Going “Soft” Kill Sears (SHLD)?

April 9, 2012 2 comments

First, a look at the five-year chart for SHLD.

Sears SHLD 5-year stock price chart

Sears SHLD and its 5-year dis-engagement

The slide in Sears has been rather impressive. It seems like only a few short years ago they were being lauded for their “brilliant” strategy of promoting soft lines, like clothing. Then they expanded even more, including grocery items and more. I suppose the idea was to capture the entire family business with the stereotypical male going for the hardware items such as Craftsman tools, the the stereotypical female purchasing clothes, groceries, appliances, etc.

In reaching for an ever-larger percentage of the family shopping basket, it appears Sears has lost more and more of it.

Sears now is selling its premium brand Craftsman tools, riding lawn mowers, etc. at steep discounts.

This has been going on since at least before Christmas. Our local Sears sits in a huge new building and includes an automotive center. Almost any day you can go there a see very few people inside, and even fewer buying very much. The soft good are OK, but nothing to get excited about. Tools have been heavily discounted for the past several months. The electronics section is a real yawner, poorly organized, over-priced, with few items to get excited about. It is not surprising at all then, with this as background, what the 1-year SHLD stock price chart looks like.

Sears SHLD 1-year stock price chart

Did going "soft" kill Sears?

After a relatively brief period of overbought insanity, SHLD bounced off the declining white price resistance line and is now heading back to earth.

It appears that SHLD may over-correct into oversold territory, knocking the stock price down further.

In light of the steep discounts on its premium Craftsman line, it appears Sears is in trouble. If Sears does ultimately fail, or becomes a pale shadow of its former self, it will likely be because Sears tried to be too many things to too many people. Going “soft” may kill Sears.

Disclaimer: The above is for informational purposes only. This should not be considered investment advice. Any investment decisions are your own and should be made after conducting your own independent research and / or in consultation with a professional investment advisor.