Given Sears' (SHLD) state of financial disarray, this writer is thinking that spending $11 on a large pizza or maybe a six-pack of craft beer instead of buying one share of the fading retailer may prove more fulfilling.
Shares of Sears have plummeted by about 52% during the past year, badly lagging the S&P 500's 14% gain over the same time-span. Fetching about $11.30 a share in early trading Tuesday, shares of Sears cost about the same as a large Brooklyn style pizza from Domino's Pizza (DPZ) - Get Report . At Yum! Brands (YUM) - Get Report Pizza Hut, $11 gets a person a medium pepperoni lover's pan pizza.
The sell-off in Sears shares have accelerated since its disastrous second quarter results hit the wires on Aug. 25 -- shares are down about 20%. It's not hard to decipher why the market is growing severely concerned about the viability of Sears beyond the coming holiday shopping season.
Second quarter same-store sales at discounter Kmart fell 3.3%, representing the seventh straight quarterly decline. Sales were pressed in some of Kmart's most important categories, such as pharmacy, groceries and consumer electronics.
As for Sears, it notched its eighth consecutive same-store sales decline as sales dived 7%. Weakness was felt across the board for Sears, with sales falling in home appliances, apparel, cosmetics and footwear.
Perhaps more concerning than the sales declines were the dangerously low cash levels for Sears as it gears up for the holidays. Cash and equivalents declined to $276 million from $1.8 billion a year ago. Consequently, Sears was forced to accept $300 million in financing from CEO Edward Lampert's investment vehicle ESL Investments.
Sears spokesman Howard Riefs didn't return immediately return a request seeking comment.
The precarious financial situation of Sears has caught the ire of ratings agency Moody's.
Moody's slashed its speculative-grade liquidity rating on Sears one notch to SGL-3 from SGL-2. The new rating reflects the likelihood that Sears will continue to need outside financing to stay in business, and that it may require covenant relief in order to maintain orderly access to funding lines.
"We recognize the risks associated with relying on these sources and continued shareholder support to finance its negative operating cash flow which is estimated by Moody's to be approximately $1.5 billion this year," said Christina Boni, a Moody's vice president.
This writer will gladly take a Brooklyn style slice -- a share in Sears would likely trigger way more heartburn.