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Sears Holdings Stock Has a Bleak Future — Here's Why


Retailer Sears Holdings' (SHLD - Get Report) stock dropped like a rock over the summer, to a 52-week low of $19 from a $43 high. Since then the stock has recouped a portion of its losses and returned to the $25 range. Despite the bounceback, investors should avoid holding shares of Sears Holdings for the long term.

The company turned a second-quarter profit, its first in more than three years. But don't get carried away with dreams of a turnaround.

That's because that performance was driven by a one-time gain from the sale of wholly owned properties and joint-venture assets to real estate investment trust Seritage Growth Properties (SRG) . That cash infusion was much needed to boost Sears' reserves, which continue to fall due to operating losses driven by abysmal performance in its stores.

Case in point: Comparable sales at stores open for more than a year fell 11%, driven in part by a downswing in consumer electronics. Sears has a weak core business operating in a perpetual environment of uncertainty with very few signs of progress toward turning that around.

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Analysts expect the company will report a third-quarter loss per share of $2.84...