Sears (SHLD) Stock Plunging Amid Seritage Growth Properties Rights Offering

NEW YORK (TheStreet) -- Shares of Sears Holdings Corp. (SHLD) were plunging in late morning trading on Wednesday, after it announced its plans to spin off about 254 stores into a real estate investment trust, Reuters reports.

Late Tuesday, Sears announced that its planned REIT, Seritage Growth Properties commenced a rights offering for at least 53.29 million class A common shares.

Under the terms of the rights offering, Sears is distributing to its stockholders, one transferable subscription right for every share of Sears common stock held as of 5:00 p.m. ET on June 11.

The subscription right entitles the holder to buy one half of one common share of Seritage for each share of Sears Holdings common stock for $29.58 per whole share.

The subscription rights offering will expire on July 2, Seritage said.

The struggling department store retailer released its first quarter earnings on Monday.

The company posted a loss of $2 per share, while revenue fell to $5.88 billion from $7.9 billion a year ago.

Analysts polled by Thomson Reuters were expecting a loss of $2.59 per share on revenue of $6.08 billion.

Comparable store sales fell 10.9% in the quarter, made up of a 7% decline at Kmart and a decrease of 14.5% at Sears Domestic.

"During the first quarter, we made significant progress in our transformation from a traditional, store-network based retail business model to a more asset-light, member-centric integrated retailer leveraging our Shop Your Way platform," Sears CEO Edward Lampert said in a statement.

About 1.01 million shares have exchanged hands as of 10:26 a.m. ET today, compared to its average trading volume of about 669,652 shares a day.

Hoffman Estates, Ill.-based Sears is an integrated retailer that operates a national network of stores with 1,831 full-line and specialty retail stores in the U.S. through Kmart and Sears stores.

Separately, TheStreet Ratings team rates SEARS HOLDINGS CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate SEARS HOLDINGS CORP (SHLD) a SELL. This is driven by a number of negative factors, 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 weak operating cash flow and poor profit margins."

You can view the full analysis from the report here: SHLD Ratings Report

SHLD ChartSHLD data by YCharts

More from Markets

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Jim Cramer: The 10-Year Yield Could Go to 2.75%

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%