After Unfortunate Events, S&P Places Sears on Ratings Watch Negative

On Tuesday evening, S&P Ratings placed Sears

"B" rating on credit watch negative. This comes after Tuesday's announcement that comparable-store sales for the first 8-weeks of its quarter fell by 5.2%. The broadline retailer said the primary driver of the lower sales was from its consumer electronics and home appliance businesses. Sears also announced the plan to close 100-120 Kmart and Sears stores. S&P says they expect "credit protection metrics will deteriorate further over the near term. The rating action is also a result of the company's announcement that quarter-to-date performance is significantly below expectations; the company has announced that it expects fourth-quarter EBITDA to be less than half of the prior year's amount." They continued, "In our view, the company's announcement of 100 to 120 store closures may do little to help its poor performance. We believe that one of the primary issues is that the company has underinvested in its stores base, especially when compared with its peers." Currently, shares of Sears are flat in pre-market trading, at $33.33 per share. Sears is down over 54% year-to-date.