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Shares of troubled department store Sears rose 18 per cent to $11.13 on Tuesday, as chief executive Edward Lampert, along with major shareholder Fairholme Capital, extended their holdings in the company.
It takes Sears’ share price to its highest level of 2017, after investor fears were stoked last week by the company’s disclosure in its annual report that “substantial doubt” existed over its ability to remain a going concern.
Sears’ story is part of a broader decline within the US retail industry, which in turn marks difficulties for US malls that rely on big department stores like Sears as “anchor tenants”.
The announcement from Sears last week pushed its stock price lower, despite attempts by the company’s chief financial officer, Jason Hollar, to offer reassurance that the situation is not as bad as it seems.
An SEC filing released on Friday shows Mr Lampert bought close to 526,000 shares between last Wednesday and Friday at prices between $7.83 and $8.39. The purchases increased his direct stake in the company to 31.84m shares, amounting to 29.8 per cent of Sears’ total shares outstanding. Indirectly, Mr Lampert owns a lot more. According to Sears Holdings’ annual report:
“Affiliates of Edward S. Lampert, our chairman and chief executive officer, collectively own approximately 48% of the outstanding shares of our common stock at January 28, 2017. These affiliates are controlled, directly or indirectly, by Mr. Lampert.”
A filing on Monday from Bruce Berkowitz of Fairholme Capital Management, a large shareholder in Sears, shows just under 287,000 shares of Sears stock were purchased between last Thursday and Monday, at prices ranging between $8.05 and $8.46 per share. That comes in addition to a string of other purchases through March — including almost 614,000 shares bought between March 20 and March 22 last week — that have brought Fairholme Capital’s stake in Sears to 28.84m shares.
Despite the price bump, the stock remains 90.6 per cent lower than its peak in 2007, although still above its low of $5.54, which is 95.1 per cent below its peak.