Sears Holdings
16 марта, 00:28

It's Just Starting: Moody's Warns A Deluge Of Retail Bankruptcies Is Coming

2017 was a perfect storm for "brick and mortar" retailers who officially lost the war with Amazon, and no less than 30 retail chains filed for bankruptcy in a year in which the CEO of Urban Outfitters said the "retail bubble has now burst"... Source: Reorg First Day... bringing the total number of Chapter 11 cases since mid-2015 to 50, accounting for over $20 billion in liabilities. So is the worst over for retail, or is the sector just now approaching the eye of the hurricane? According to the latest Moody's research report on the retail sector, the rating agency now forecasts at least six retail & apparel issuers defaulting over the next 12 months, with most of these occurring in the first half of the year.  While the good news is that the industry default rate is expected to peak at 12.43% this March, Moody's cautions that the still-high default forecast for the remainder of 2018 points to more pain before this lower ratings rung in retail stabilizes. Recent defaulters include Tops Markets, which filed for Chapter 11 on February 21, which followed Bon-Ton's filing on February 4. Charlotte Russe and Charming Charlie both defaulted in December, and Claire's has hired restructuring advisors. Meanwhile, the Toys “R” Us bankruptcy in September its overnight Chapter 7 liquidation has only added to pressures by accentuating potential pressures between vendors and the more stressed retailers, even as it left some 33,000 employees without a job. The problem is that it only gets worse from there, and the rating agency expects upcoming maturities for distressed issuers will spike in 2019. Defaults are growing as many struggle with high leverage and challenged operating performance. These challenges are compounded by the biggest risk - mounting maturities -  which spike in 2019. Overall, issuers in the Caa1 and lower group face $14.9 billion in public and private maturities due 2018 through 2020 as shown in Exhibit 1. The lion's share of these maturities (Exhibit 2) is attributable to just five issuers: Sears Holdings Corp. (Ca negative), Neiman Marcus Group LTD LLC (Caa2 negative) Claire's Stores, Inc. (Ca negative), BI-LO Holding Finance (Caa1) Guitar Center Inc. (Caa1 negative). Additionally, while the credit markets have remained open to refinancings, those with more challenged credit profiles and operating performance problems will face growing challenges in tapping the markets, especially in an environment where monetary policy is tightening. Meanwhile, spooked by the Toys "R" Us fiasco, many others will face the risk of vendors pulling the supply plug in the wake of Toys “R” Us bankruptcy, which was triggered when certain vendors cut the company off. As companies move down the rating scale, the vendor portion of the liquidity profile can become strained as concerns over the strength of the company are magnified. Tighter repayment terms, including the dreaded “cash on delivery” (COD), can have an even more serious impact on liquidity than a looming debt maturity. Without vendors, companies don’t get merchandise, and without merchandise, there are no sales. So in addition to the above 5, who else is on the list? Many of the names on Moody's distressed list, and those that have filed for bankruptcy in the past 12 months, are, or rather were, sponsor-owned. It will hardly surprise anyone that many distressed retailers are highly leveraged following sponsor-led LBOs. High leverage has proved problematic for the retail industry due to the industry's inherent cyclicality and operating income challenges post-recession. Such pressures have been vastly aggravated the past 10 years with the rapid rise of online competition, which has severely squeezed profit margins across the board. The debt loads assumed by many smaller retailers have created an untenable competitive reality: they are financially ill-equipped to deal with the changing retail landscape. They also lack sufficient resources to build out online  capability, keep stores fresh, and fend off pricing threats from larger competitors. The successful retail LBO stories, such as Dollar General Corp. (Baa2 stable) and BJS Wholesale Club Inc. (B3 stable), have typically been those that haven't needed to compete online. The exhibit below lays out the quantitative characteristics of the 20 distressed issuers in Moody's Caa/Ca universe. Putting these metrics into perspective the debt/EBITDA Caa ”range” is 6-8x, with the EBIT/interest “range” 0.5-1x. Debt/EBITDA above 8x results in a Ca score, as does EBIT/interest below 0.5x. And before we present the full list of upcoming maturities over the next 3 years, virtually none of which will be made, here is Moody's brief discussion on whether the retail situation is improving. Buoyed by favorable macroeconomic conditions, as well as the potential favorable impact from the US Corporate Tax Law change implemented by Washington in late 2017, we believe retail is improving. However, we continue to believe that a “have/ have nots” phenomenon is accelerating, with the effect akin to a teeter-totter. As the larger, better capitalized retailers continue to grow and prosper, the smaller, highly-leveraged retailers are struggling harder to compete and survive. There are four key pillars that retailers need to have in place to remain healthy, similar to the stability that the four legs provide for a chair: capital structure, liquidity, capital spending, and competitive position. As we progress down the ratings/credit quality scale, these four “legs” tend to get more distorted in relative “length” to each other. For example, a retailer with high leverage will potentially have problems in all four of these categories, which we explain as follows: Capital structure: When leverage remains stubbornly high and operating performance fails to keep pace, the capital structure is  significantly weakened over time. Ultimately, the burden of too much debt always wins. A leveraged capital structure has deleterious effects for liquidity, capital investment, and competitive positioning. Liquidity: This is the oil that keeps the engine running. An unfriendly or onerous debt maturity schedule makes it difficult to keep the oil flowing, and as we saw with Toys “R” Us, can create enough vendor concern to cause a bankruptcy due to a trade squeeze. Capital spending/investment: Without money to invest, stores get tired and therefore become unattractive to shoppers. Websites lose their ability to keep up with competitors and become unattractive to visitors. Supply chains slow down, negatively impacting inventory efficiency. Competitive position: Competing with larger, better capitalized retailers is challenging in a static environment. Today’s retail is as volatile as ever driven by the secular shift to e-commerce, making competition the most acute it has ever been. And, in the midst of this, Walmart and Amazon are fighting the battle of the century over market share, using price as a key weapon. Virtually every other retailer runs the risk of being collateral damage in this battle, making flexibility critical, which is an asset most lower rated retailers do not own. That was Moody's being diplomatic. The real answer, as shown in the table below which lists the full schedule of upcoming debt maturities by retail issuer, is that unfortunately no, for most retailers except a handful of very prominent online names, the situation is not only not improving, but it's never been worse.

15 марта, 13:25

Toys R Us Closing Rumors Prove Everything is Not Awesome in Toyland

Bad news, Barbie. Toys R Us declared bankruptcy recently and may close every location in the United States. Here's what that means for your kids

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15 марта, 09:27

Компания Sears зафиксировала квартальную прибыль

Американский ритейлер Sears Holdings представил финансовые результаты за фискальный четвертый квартал с окончанием 3 февраля, согласно которым чистая прибыль составила $182 млн или $1,69 на акцию по сравнению с зафиксированным годом ранее убытком на уровне $607 млн или $5,67 на бумагу. Тем временем, выручка в рассматриваемом периоде сократилась на 27,7% г/г с $6,05 млрд до $4,38 млрд в связи со снижением числа новых магазинов по сравнению с аналогичным периодом прошлого года. При этом сопоставимые продажи упали на 15,6%, в то время как аналитики в среднем ожидали снижения на 16,4%.

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15 марта, 09:16

Компания Sears зафиксировала квартальную прибыль

Американский ритейлер Sears Holdings представил финансовые результаты за фискальный четвертый квартал с окончанием 3 февраля, согласно которым чистая прибыль составила $182 млн или $1,69 на акцию по сравнению с зафиксированным годом ранее убытком на уровне $607 млн или $5,67 на бумагу. Тем временем, выручка в рассматриваемом периоде сократилась на 27,7% г/г с $6,05 млрд до $4,38 млрд в связи со снижением числа новых магазинов по сравнению с аналогичным периодом прошлого года. При этом сопоставимые продажи упали на 15,6%, в то время как аналитики в среднем ожидали снижения на 16,4%.

15 марта, 05:30

These U.S. Retailers Are Completely Failing to Attract Customers

With so many stores abandoning their customers, it’s no wonder retail is failing. Here are 20 of the worst retailers who can't hold on to their shoppers.

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14 марта, 18:54

A $4.5 Trillion Opportunity Only 3 Years Away

Analysts have been predicting the end of brick-and-mortar retail for years. But our Emerging Trends Strategist sees this as a huge opportunity...

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20 февраля, 16:25

Don't Get Too Excited About Sears Holdings' Guidance Increase

Sears Holdings' fourth-quarter profitability came in better than expected, but the company is still probably headed for bankruptcy.

18 февраля, 01:15

Retail Apocalypse Accelerates: 200 Winn-Dixie Stores To Close As Parent Goes Bankrupt

After shutting down more than 5,000 stores in 2017, store-closings are accelerating in 2018 with news that Bi-Lo LLC, the supermarket company that owns the Winn-Dixie chain, is preparing for a potential bankruptcy filing as soon as next month, and is planning to shut almost 200 stores as part of the move - either before or after the filing. Winn-Dixie joins JCPenney, Bon-Ton, Toys R Us, Sam’s Club, Macy’s, Sears, Kmart and others in the growing list of 2018 shutterings as the 'great economy' that stocks foreshadow fails to show up in the retailer landscape. As details, the new year is shaping up to be another difficult one for traditional retailers. J.C. Penney – 8 stores  After closing more than 140 stores in 2017, J.C. Penney is shutting down one of its distribution centers and eight more stores nationwide, The Dallas Morning News reports.  Around 670 jobs will be cut with the closing of the distribution center in Wauwatosa, Wisconsin, this summer. Meanwhile, around 480 employees will be affected by the eight stores that are closing, which follows a post-holiday review. The locations will be shut down between now and May, according to CNBC. Bon-Ton – 42 stores The Bon-Ton Stores Inc., a department store chain, is closing more than 40 underperforming locations this year, including stores under all of the company’s nameplates. Store closing sales are scheduled to begin on February 1 and run for approximately 10 to 12 weeks, the company said in a news release. Associates at the affected locations will be offered the opportunity to interview for available positions at other stores. Toys R Us – Up to 182 stores Toys R Us, the iconic Wayne, New Jersey-based toy retailer, has announced that it will shut down up to 182 U.S. stores. Store closing sales are likely to begin in early February, with the bulk of the closures expected to take place by mid-April, according to a letter from the company’s CEO. However, some closures may be avoided if the store can negotiate more favorable lease terms. Sam’s Club – 63 stores Bad news for Sam’s Club members! The Walmart-owned warehouse club has abruptly shut down multiple locations across the country, according to local media reports. The retailer has confirmed that 63 clubs are closing and up to 12 of them will be converted to e-commerce fulfillment centers. Walmart said the impacted clubs will close over the next few weeks, leaving 597 Sam’s Club locations. Macy’s – 11 stores     Nearly a dozen Macy’s department stores will soon be closing their doors forever. In a news release, the company announced the closure of 11 Macy’s stores. It’s part of the retailer’s plan to close approximately 100 stores, which was announced back in August 2016.  Macy’s intends to close an additional 19 stores as leases or operating covenants expire or sale transactions are completed. Sears and Kmart – 103 stores Just days after the holiday shopping season ended, Sears Holdings announced that it’s closing more than 100 stores.In a news release, the struggling retailer said it told associates at 64 Kmart and 39 Sears stores that the locations will be shut down between early March and early April 2018. Liquidation sales will begin as early as January 12 at the impacted department stores. Sears Holdings previously announced plans to shut down 63 Kmart and Sears stores this January. The company closed more than 350 locations last year. J. Crew – 50 stores After reporting a 12% sales drop for its third quarter, J. Crew said it will close dozens of stores by the end of January 2018, CNN Money reported. In a news release, J.Crew said it expects to close 50 stores during fiscal 2017, which ends in January. And now Winn-Dixie plans to shutter 200 of its 500 stores... Winn-Dixie's parent, Bi-Lo LLC, which went bankrupt in previous incarnations in 2005 and 2009, may still find a way to restructure its debt out of court. However, as Bloomberg reports, with low margins and ample competition, the grocery business has always been challenging. But now the industry is contending with a more aggressive push by big-box retailers and Inc., which acquired Whole Foods last year to give it a larger brick-and-mortar presence. The moves threaten to force older chains to either consolidate or revamp their operations. Bi-Lo is laboring under more than $1 billion in debt following its 2005 buyout by Lone Star Funds. The company and its creditors have held talks to discuss a possible debt-to-equity swap, as well as alternatives such as asset sales, Bloomberg reported last year. Lone Star piped in $150 million when the grocer exited Chapter 11 the first time, and invested $275 million to help fund the purchase of Winn-Dixie in 2012. But it probably will still come out ahead, having paid itself at least $800 million since 2012, along with management fees it’s collected, according to regulatory filings. Southeastern Grocers, based in Jacksonville, Florida, says it’s the fifth-largest supermarket chain, with more than 700 stores and 50,000 employees. It also operates the Harveys and Fresco y Mas chains.

15 февраля, 16:12

Frontrunning: February 15

Global Stocks Power Ahead, Unfazed by U.S. Inflation (WSJ) Florida community seeks answers after 17 killed (Reuters) Florida Teen Charged With 17 Murder Counts in School Attack (BBG) Shooting suspect was 'crazy about guns' (Reuters) Hedge fund Bridgewater makes $22 billion bet against European firms (Reuters) Number of crypto hedge funds soars amid bitcoin volatility (Reuters) Publishers Warm to Google’s Ad Blocker—but Cautiously (WSJ) Shifting Alliances Make Syria’s Tangle of Wars More Dangerous (WSJ) Trump’s Tax Law Could Make Divorces Bitterer (BBG) EU tells Facebook, Google and Twitter to do more for users (Reuters) Rise of Private Assets Is Built on a Mountain of New Debt (WSJ) Doesn’t Anyone Care About Deficits Anymore? (BBG) Cyril Ramaphosa elected President of South Africa (Reuters) Republican Foes of Health Law Try Patch Job Ahead of Midterms (WSJ) How Ramaphosa Pulled the Strings and Toppled a President (BBG) Qualcomm meets Broadcom to discuss $121 billion acquisition offer (Reuters) Lebanese presidency denies U.S. Secretary of State kept waiting at palace (Reuters) Overnight Media Digest WSJ - AT&T Inc is considering an unusual gambit in the coming trial over its $85 billion bid to buy Time Warner Inc , seeking testimony from the Justice Department's antitrust chief Makan Delrahim, who wants to block the merger. ( - Cisco Systems Inc said Wednesday it would repatriate $67 billion of its foreign cash holdings to the U.S. this quarter, in one of the largest repatriation plans yet revealed. ( - British officials blamed Russia for last June's massive "Petya" cyberattack, which crippled computer networks at multinational firms including FedEx Corp and Merck & Co Inc. ( - India's Punjab National Bank said it had uncovered an alleged scam involving some $1.77 billion in transactions at a Mumbai branch. ( - A gunman opened fire at a South Florida high school at the end of the school day Wednesday, leaving 17 people dead and more than a dozen injured in one of the deadliest U.S. school shootings. ( - Siemens AG expects to spend more on compliance as the German company adjusts its accounting in accordance with the new U.S. tax law, the company’s head of tax Christian Kaeser said   FT Israeli drugmaker Teva Pharmaceutical U.S. shares shot up in after-hours trade on Wednesday after Berkshire Hathaway Inc said it had taken a new stake in the company, signalling confidence by famed investor Warren Buffett. Cisco Systems Inc has become the first big tech company to pass the rewards of U.S. tax reform directly to its investors, with the announcement of a $25 billion stock buyback plan that contributed to a 6 per cent bounce in its share price late on Wednesday. Renault SA have confirmed that chief performance officer Stefan Mueller is to leave the company, clearing the way for Thierry Bollore to be anointed as number two on Thursday.   NYT - State financial regulators in New York said on Wednesday that they would investigate reports that gay men have been denied insurance policies covering life, disability or long-term care because they were taking medication to protect themselves against H.I.V. - The U.S. Food and Drug Administration on Wednesday approved a long-awaited blood test to detect concussions in people and more quickly identify those with possible brain injuries. The test is called the Banyan Brain Trauma Indicator. - AT&T Inc is seeking to put the head of the Justice Department's Antitrust Division on its witness list in a trial over the government's decision to block the phone company's $85 billion merger with Time Warner Inc, according to two people with knowledge of the pretrial activity.   Canada THE GLOBE AND MAIL ** Sun Life Assurance Co of Canada will become the first major insurance company to add medical marijuana to its group benefits plans for Canadian companies, a pivotal move in the insurance industry that will help ease the financial burden for medical-marijuana users, and a sign of the growing acceptance of cannabis in the Canadian workplace. ** The Quebec government's economic advisory council is calling on the province to quintuple its investment in artificial intelligence to C$500 million ($400.48 million) over the next decade, warning its nascent power in machine learning will be at risk if it does not boost funding. ** Barrick Gold Corp is on track to lose its long-held crown as the world's largest gold producer after forecasting production for this year that will likely fall short of U.S. competitor Newmont Mining Corp. NATIONAL POST ** Sears Canada creditors could be a step closer in their attempt to recoup some of the C$3 billion ($2.40 billion) in controversial dividends paid out to the company's shareholders — most notably, Sears Holdings Corp chief executive Edward Lampert — years prior to the defunct retailer's insolvency filing last June. ** Canopy Growth Corp strengthened its lead in the cannabis market in the third quarter, more than doubling its year-over-year revenue in the three months leading to Dec 31.   Britain The Times * Jeff Fairburn, chief executive of Persimmon, is in line for one of the largest bonuses in UK corporate history, currently set to be as much as 100 million pounds ($140.03 million). * Sterling will plunge more than 15 percent from current levels if Britain leaves the European Union in a disorderly fashion, the International Monetary Fund has warned. The Guardian * British workers are set for the biggest annual pay rise in a decade, according to forecasts from the Bank of England's agents, as the rising minimum wage and staff shortages finally begin to lift wages above inflation. * GVC, the online gambling firm behind Foxy Bingo, has been fined 350,000 pounds for "repeatedly misleading consumers" with offers of free bonuses, on the same day that regulators announced a crackdown on gambling adverts. The Telegraph * An independent U.S. trade body on Wednesday said it rejected hefty duties on Bombardier's C-Series jets partly because Boeing lost no sales or revenue when Delta Air Lines ordered the aircraft in 2016 from the Canadian planemaker. * The chief executive of Galliford Try has said that the cost of a troublesome road project in Aberdeen, one of the contracts which sunk fellow contractor Carillion, will be more than 150 million pounds higher than it had initially thought. Sky News * The parent company of Barratt, Dip Dab brands, Tangerine Confectionery, will be auctioned later this year by its owner, the private equity behemoth Blackstone. * The European Union economy grew at its fastest rate in 10 years in 2017, registering a 2.5 percent increase on the year before. The Independent * British lawmakers have called for urgent action over an erupting pensions misselling scandal after finding that financial advisers exploited thousands of savers for "cynical" personal gain. * Major banks including Goldman Sachs and JP Morgan have been called out by Conservative MP and head of the influential Treasury Select Committee Nicky Morgan for failing to sign the Women in Finance Charter, which pledges to promote gender diversity across their businesses.    

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14 февраля, 16:35

Will Best Buy Really Be the Biggest Winner From Sears Holdings' Demise?

Best Buy could capture about $1 billion of incremental sales if Sears Holdings goes out of business, according to analysts at UBS. But J.C. Penney would profit even more from its rival's disappearance.

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30 января, 02:19

MetLife Tumbles After Discovering "Material Weakness" In Financial Reporting

In an ugly echo of the GE debacle from two weeks ago, MetLife stock tumbled 10% after hours on Monday after the company announced that it would revise prior financial reports because of overdue monthly pension benefits that it had failed to pay to possibly tens of thousands of workers in past years. Specifically, MetLife had uncovered a "material weakness" in internal control over financial reporting of its annuity business and expects to increase reserves in total between $525m and $575m pre-tax. It also disclosed that the Securities and Exchange Commission ​enforcement staff ​“has made an inquiry” about the matter. MetLife said it also is responding to questions from its lead state regulator, the New York Department of Financial Services, and other state regulators. Shares tumbled as much as 10% on the news. From the press release: Management of the company has determined the prior release of group annuity reserves resulted from a material weakness in internal control over financial reporting. MetLife expects to increase reserves in total between $525 million and $575 million pre-tax, to adjust for reserves previously released, as well as accrued interest and other related liabilities. The amount of the reserve increase is based in substantial part on actuarial, legal, statistical, and other assumptions. If actual facts and factors differ from those the company has assumed, the reserve the company has established could be adversely or positively affected. As a result of the gross oversight, full-year net income for 2017 would be slashed by $165 million to $195 million, with the insurer adding that it intends to "make prior period revisions to reflect the balance of these adjustments in the appropriate historical periods." The company also expects to correct historical periods for unrelated errors in those periods, as required by accounting standards. Those errors were previously recorded in the periods in which the company identified them. MetLife also unveiled that it is responding to inquiries from the U.S. Securities and Exchange Commission, as well as state regulators from New York and other locations. What does this mean? As auditor Francine McKenna noted, the part about "currently reviewing its processes and procedures for identifying unresponsive and missing international group annuity annuitants and pension beneficiaries" simply means that Metlife had no idea how many people they owed. "Like property escheatment. Unclaimed potentially dead people." Explaining this further, MetLife is one of numerous large and highly rated life insurers that agree to take responsibility for some or all of the payments due participants in private-sector plans from employers such as Sears Holdings and PPG Industries. These deals are called “pension risk transfer.” Many employers with old-fashioned pension plans, under which they pay monthly benefits to retired workers, are eager to reduce their exposure to investment and interest risk in running pensions by striking risk-transfer agreements with insurers. Those deals provide assets for investment, while helping the employer cut the risk of volatility in results. But they also require insurers and the employers to clean up and transfer data for many workers, including some that have left the company long ago. And here lies the rub: The New York insurer disclosed the unpaid pensions in mid-December and has been working with a firm that specializes in finding addresses to get in touch with the retirees who are owed money. It had set a goal to determine by Feb. 1 how much money it owed people. A law firm hired by MetLife has been investigating how its retirement business erred in allowed the pensions to go unpaid, according to the WSJ. The New York insurer disclosed the unpaid pensions in mid-December and has been working with a firm that specializes in finding addresses to get in touch with the retirees who are owed money. It had set a goal to determine by Feb. 1 how much money it owed people. A law firm hired by MetLife has been investigating how its retirement business erred in allowed the pensions to go unpaid. As Bloomberg adds, the charges add to a expenses MetLife incurred last year, many of them spurred by the separation of a U.S. retail business called Brighthouse Financial Inc. Chief Executive Officer Steve Kandarian spun off that unit in August to help it remove some volatility in results and focus on other businesses including ones selling insurance through employers and international markets. As a result of the uncovered weakness, MetLife pushed back its earnings release for the fourth quarter, which was originally scheduled for this week, to Feb. 13 and said it will hold a call the next day. MetLife still expects to file its 10-K by March 1 Following the MetLife news, the big question on many investors minds is whether GE and MET are 'lone wolves' or this type of unreported "material weakness" is a pervasive issue across the entire industry?

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24 января, 18:43

Another Body Blow: Sears Holdings to Shutter Over 100 Stores

In what's hardly a surprise, the struggling retailer announces yet another round of store closures.

28 декабря 2017, 23:33

The Shocking Amount of Money the Most Hated CEOs Make Every Year

These CEOs definitely believe nice guys finish last. They are hated and still raking in huge paychecks.

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23 декабря 2017, 21:59

Kmart must pay $59 million in drug fraud settlement

Kmart and its parent company, Sears Holding Corporation, have settled a $59 million case over allegations of prescription drug fraud made more than a decade ago.

21 декабря 2017, 23:33

Hold Stanley Black & Decker (SWK) Stock Now: Here's Why

Stanley Black & Decker (SWK) is well-poised to gain traction from strong tools business, a wide product portfolio and synergies from buyouts. Industry competition and rising costs remain concerns.

19 декабря 2017, 17:30

Can Amazon's Stock Sustain its Success in 2018?

It's been a year of steady gains for the online behemoth with Amazon moving from a position of strength to one of dominance.

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07 декабря 2017, 16:31

Sears Gains After Investor Asks Chain to Consider Going Private

Sears Holdings Corp. gained as much as 8.7 percent in early trading after investor Memento SA recommended the retailer consider going private, saying that “excessive” short selling has hammered the stock....