Sears Holdings under Review

We are placing our fair value estimate for Sears Holdings SHLD under review while we take in the company's first-quarter results as well as its announcement of a $60 million restructuring charge resulting from the merger of Sears and Kmart. Comparable-store sales for the quarter were down 3.7% at Kmart and 3.1% at Sears; this was not a surprise, given their recent merchandising woes and the cool weather, which hurt sales of seasonal merchandise. The 2% operating margin was far below the midsingle-digit margins of competitors like Wal-Mart WMT and Target TGT. We are still unclear as to what this retailer will look like in the long run and think asset sales lie ahead; we will continue to re-evaluate our fair value estimate as new information comes to light.