Even after losing 27 percent of its value Tuesday, Sears Holdings Corp.'s (SHLD) share price is expected to plunge some more. Goldman Sachs Group Inc. (GS) reiterated its sell rating on Sears and cut its 12-month price target to $30 from $43.
The Hoffman Estates, Ill.-based company has long been struggling with weak top-line performances and even weaker bottom-line results.
Goldman Sachs expects to see a continued decline in Sears's future revenue generation and has lowered its earnings per share estimates for Sears between 2011 and 2013 to a loss of $4.79, $4.75 and $4.57, from a loss of $2.33, $1.94 and $1.82, respectively.
Tuesday, the largest U.S. department store chain announced it would close as many as 120 stores after holiday sales of consumer electronics and apparel declined in the U.S. Same-store sales at Sears for the eight weeks ended December 25 was down 6 percent from the same period last year. In contrast, retail competitors Macy's Inc. (M) and Wal-Mart Stores Inc. (WMT) enjoyed a rather jolly holiday season.
Due to the company's performance in 2011, it expects to record in the fourth quarter a non-cash charge of $1.6 to $1.8 billion in relation to a valuation allowance on deferred tax assets. Further, Sears said it may recognize in the fourth quarter an impairment charge on some goodwill balances for as much as $0.6 billion.
The company was acquired by Kmart in 2005 and overseen by billionaire hedge fund manager Edward Lampert. Today, the company's shares are worth only a quarter of what they were valued at five years ago.
So far this year, Sears has seen its shares fall 55 percent. The company's shares are currently trading at around $33 a share.