NEW YORK (AP) -- Think of Sears like a Jenga game, an analyst said Friday, with a few too many blocks pulled out and the entire structure on the brink of collapse.
The analogy came after Sears Holding Cos., which operates Sears and Kmart stores, reported a bigger-than-expected loss for its first quarter on slumping sales. The retailer also said it would explore strategic options for its service-protection plan business in order to raise cash.
Shares fell 14 percent in premarket trading.
While most investors think of Sears as a single unit, said Credit Suisse analyst Gary Balter, it is really an accumulation of many pieces: 1,211 Kmart stores, 851 Sears stores, Lands' End, Sears Canada, Sears Service, and brands like Kenmore, Craftsman and DieHard.
Hedge fund billionaire and Sears Chairman Eddie Lampert has been slowly removing pieces, such as some of its real estate portfolio and part of its Canada operations, like players pull out pieces of a Jenga game, to get quick cash, Balter said.
"We believe what we saw this quarter, and what we are likely to see in the future, is that too many pieces have been removed, which in turn is reducing the strength of the core, and suggesting that further actions will weaken it even more," he said.
Balter kept his "Underperform" rating on the stock.
Shares fell $8.26, or 14 percent, to $58.17 in premarket trading. The stock has traded between $38.40 and $68.77 in the past 52 weeks.