NEW YORK (TheStreet) -- Sears Holdings Corporation (SHLD) fell 13.74% to $36.72 at the close of the trading on Friday, down $5.85 from the previous close of $42.57. The stock had a volume of 10,339,635, well above its average volume of 1,367,940.
The drop coincided with Moody's Investor Service's downgrading of the stock to Caa1 from B3 after Sears' comparable sales fell 7.4% year-over-year for the quarter that ended on Jan. 6, 2014. For the fiscal year, Sears anticipates domestic Adjusted EBITDA loss between $308 million and $408 million compared to profit of $557 million the previous year. Moody's said it expects full year cash burn, after capital spending, interest and pension funding, to land around $1.2 billion in 2013 and anticipates Sears' cash burn to easily exceed $1 billion in 2014.
"Operating performance for fiscal 2013 is meaningfully weaker than our previous expectations, and we expect negative trends in performance to persist into 2014," said Moody's Vice President Scott Tuhy. "While Sears noted improved engagement metrics for its 'Shop Your Way' Rewards program, Moody's remains uncertain when these improved engagement metrics will lead to stabilization of operating performance."
TheStreet Ratings team rates Sears Holdings Corp as a Sell with a ratings score of D. The team has this to say about its recommendation:
"This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity and poor profit margins."