Sears Dropped From S&P 500 Following Public Float Issues
Sears Holdings Corp. watched as its stocks fell by 8 percent on Thursday after the once mighty retail corporation was removed from the S&P 500, soon to be replaced by chemical company LyondellBasell Industries which will be added to the index on Sept. 4.
Shares at Sears ended down 7.92 on Thursday, a $4.55 loss for a closing price of $52.92.
A share decline in stock prices is normal when a company exits the S&P 500. That decline occurs because hedge fund managers must sell off all of their stock in the company so they can continue to match the index.
The S&P 500 announced on Wednesday that Sears would be dropped from the S&P 500 because its public float fell ”well below the 50 percent threshold for inclusion.” The public float is the number of shares held by public investors.
62% of Sears stock during a recent regulatory filing were said to be held by Sears Chairman Edward Lambert.
Following its removal from the S&P 500 Sears released the following statement:
“While we’re disappointed in Standard & Poor’s decision, we would point out that the action is rules based and solely a function of the public float of our shares, and not the valuation or performance of the company. We would also highlight that S&P recently boosted Sears Holdings’ credit ratings outlook to stable from negative, saying the company had improved its liquidity through our financial and operational discipline.”
Sears continues to struggle in an overcrowded retail market dominated by Walmart, Target and other big box retailers who have captured many of Sears’ traditional customer base.