Shares of Sears, Roebuck & Co. (Hoffman Estates, Ill.) sank to their lowest levels in two decades after Goldman Sachs downgrade the stock to “underperform.”
The Goldman Sachs analyst, expressing concern over Sears'recent sales performances and high rate of uncollected credit card debt, said the nation's fourth-largest retailer may have to increase the money it puts aside to cover bad customer debts in its credit card business.
Shares of Sears on the New York Stock Exchange fell to as low as $19.75 on Wednesday, November 13, its lowest level since the stock hit $18.13 during a session in August 1982, according to Reuters analytics data.
“On a nine-month lagged basis, Sears MasterCard chargeoffs reached a disturbing 13.9 percent in the September quarter,''said the Goldman Sachs research note.
Another retail industry analyst said that, besides the credit card business, “there is concern about what kind of customer Sears wants to target for its apparel business.''She added that another concern revolved around “the declining demand facing Sears hard goods business as its appliance sales continue to be weaker.”
Customer debt worries have forced Sears, which reported a 28 percent drop in third-quarter profit last month, to set aside more money to cover customers unable to repay their credit card bills. The credit card business accounts for roughly two-thirds of Sears'profits, making it a key focus for investors as rising unemployment hurts consumers in an uncertain U.S. economy.