Bloomberg News

Sears’s Analyst Pool Shrinks as Morningstar Drops Coverage (2)

May 22, 2014

Morningstar Inc. (MORN:US) has dropped coverage of Sears Holdings Corp. (SHLD:US), leaving only a handful of analysts following a company that was once the largest U.S. retail chain.

Retail analyst Paul Swinand discontinued coverage as of March 18, according to a company note. “We provide broad coverage of more than 1,700 companies across more than 140 industries and adjust our coverage as necessary based on client demand and investor interest,” the note said.

Before dropping coverage, Morningstar had rated Sears “no moat,” the lowest of three rankings that refer to a company’s ability to fend off competitors. The retailer, which operates Sears and Kmart stores, has posted 29 straight quarters of revenue declines including results today in which it reported a wider net loss than a year earlier.

“One of the keys to finding superior long-term investments is buying companies that will be able to stay one step ahead of their competitors, and it’s this characteristic -- think of it as the strength and sustainability of a firm’s competitive advantage -- that Morningstar is trying to capture with the economic moat rating,” according to the Chicago-based company.

Shares of Sears, based in Hoffman Estates, Illinois, fell 2.6 percent to $35.61 at 12:05 p.m. in New York, headed toward their seventh decline in the past eight trading (SHLD:US) days.

Sears’ net loss for the first quarter was $402 million from a loss of $279 million a year earlier, as its sales slump stretched into a seventh year. The company, run by hedge-fund manager Edward Lampert, has invested in online and is shutting stores and may seek buyers for its auto centers and Canadian unit. It spun off its Lands’ End apparel business last month.

Kmart merged with Sears Roebuck in 2005 in a $12.3 billion takeover -- a deal that Lampert said would create a company with enough scale to compete with Wal-Mart Stores Inc. Instead, the retailer has suffered from declining shopping-mall traffic and the rise of online competitors such as Amazon.com Inc.

To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Ben Livesey, John Lear


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Companies Mentioned

  • MORN
    (Morningstar Inc)
    • $68.25 USD
    • 0.33
    • 0.48%
  • SHLD
    (Sears Holdings Corp)
    • $28.2 USD
    • -1.36
    • -4.82%
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