The Buzz

All markets and investing news all the time

Sears to exit S&P 500

August 30, 2012: 10:55 AM ET

Sears Holding Company has had its membership in the S&P 500 revoked.

The ailing retailer, which owns Sears and K-Mart chains as well as apparel brand Land's End, will exit the index at the close of trading on Tuesday, Sept. 4, said S&P late Wednesday.

S&P said the number of Sears shares available to the public, known as its public float, has long been below the 50% threshold needed to be considered "representative of the index."

Sears chairman Edward Lampert, founder of hedge fund ESL Investments, controls 62% of the company's shares.

Related: "Fast" Eddie Lampert may end up saving Sears

Sears has been a member of the S&P 500 index since it was founded in 1957. Before that, it had been a component of the Dow Jones industrial average, which it had joined in 1924 (and left in 1999).

S&P said Sears will be replaced by LyondellBasell, a chemicals company based in The Netherlands.

Shares of Sears (SHLD) fell 7% Thursday morning, but the stock is still up about 73% for the year. Sears is listed on the Nasdaq.

The expulsion means that index fund managers that seek to mimic the S&P 500 will need to sell shares of Sears and buy LyondellBasell stock.

Shares of LyondellBasell (LYD) were up 3%.

Sears has struggled with declining sales since it merged with Kmart in 2005. The more than 100-year old retailer has closed hundreds of stores and has announced plans to spinoff certain brands in a bid to raise cash. The company's straits have fueled persistent rumors of bankruptcy.

Despite its woes, Sears was one of the best performing stocks in the S&P 500 as recently as April.

Sears said in a statement that it was disappointed with S&P's decision, pointing out that the move was not necessarily a reflection of "the valuation or performance of the company."

Fear & Greed
Sponsored by
Stupid Stock Move of the Day
#StupidStock Move of the Day! $MAT up 7%? Hello Barbie has to be really huge to make investors forget about rest of the business.
Powered by VIP.

Get every new post delivered to your Inbox.

Join 252 other followers