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J.C. Penney Company, Inc. (JCP), The Home Depot, Inc. (HD), Sears Holdings Corporation (SHLD): It’s Not Just the Economy, Stupid!

Although we don’t believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes — just in case they’re material to our investing thesis.

U.S. stocks opened higher this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average up 0.53% and 0.2%, respectively, as of 10 a.m. EDT.

Retail: The final chapter

Last Friday, I called general-merchandise retailers’ poor quarterly results the most important trend of last week for what it revealed about consumer spending. Yesterday’s earnings report from the nation’s No. 2 retailer, Target, did nothing to alleviate that concern.

Sears Holdings Corporation

This morning, Sears Holdings Corporation (NASDAQ:SHLD) reported its fiscal second-quarter results, and the news was no better. The company posted a loss of $1.70 per share (ex-items) versus Wall Street’s expectations of a $1.10 loss. Sales, which fell 6.3% year on year to $8.9 billion, fell short of the consensus estimate of $9.5 billion. Same-store sales in the U.S. fell 1.5%, split between declines of 2.1% for Kmart and 0.8% at Sears Holdings Corporation (NASDAQ:SHLD) Domestic.

Let me be clear, however, that these numbers reflect more than weak consumer demand. For example, Sears Holdings Corporation (NASDAQ:SHLD) stores posted weak sales in appliances, a category in which major competitors The Home Depot, Inc. (NYSE:HD) and Lowe’s put up good numbers over the same period. Sears Holdings is controlled by hedge fund manager Edward Lampert, who now runs the company, too, after previous CEO Louis d’Ambrosio left earlier this year due to a family medical problem.

Between Bill Ackman at J.C. Penney Company, Inc. (NYSE:JCP) and Eddie Lampert at Sears Holdings Corporation (NASDAQ:SHLD), the recent record of hedge fund managers trying to revive once-prominent retailers serves as a cautionary tale. Lampert may have modeled his investing style on that of Berkshire Hathaway CEO Warren Buffett, but you won’t catch Mr. Buffett trying to run the Nebraska Furniture Mart (one of Berkshire’s businesses).

And speaking of J.C. Penney Company, Inc. (NYSE:JCP), its Ackman experience was so traumatic that, only this morning, the company announced it had adopted a one-year “poison pill” that prevents any single investor from owning more than 10% of its shares. No excuses for Penney, then — they will no longer be able to say, “And we would have succeeded if it wasn’t for those meddling hedgies!”

The article Sears: It’s Not Just the Economy, Stupid! originally appeared on Fool.com and is written by Alex Dumortier, CFA.

Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on LinkedIn. The Motley Fool has no position in any of the stocks mentioned.

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