| From: Sr K | 5/21/2009 5:34:11 PM | | | | | | blow-out quarter for SHLD; improved margins; bought back 1 million shares at 41.04 average, got extended credit terms beyond what they were when Lehman cut them off (or down); and Banc of America is part of the group (they had backed away).
AH SHLD up 22% to 61.28
finance.yahoo.com |
| | Sears Holdings Corp. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: Glenn Petersen | 11/20/2009 12:07:03 PM | | | | | | Lampert stays on course:
Sears shuns spending money on stores but shells out to buy its own stock
3rd-quarter losses narrow; capital spending trend concerns analysts
By Sandra M. Jones
Tribune Newspapers
November 20, 2009
If Sears Holdings Corp. Chairman Edward Lampert were making out his Christmas wish list, you can bet that more Sears stock would be at the top of the page.
When the retailer reported Thursday that its fiscal third-quarter loss narrowed as $101 million in overhead cost cuts helped to offset falling sales, it also disclosed a willingness to spend -- on itself.
Most retailers have suspended stock buyback programs as they conserve resources to cope with cash-strapped consumers who are shopping less and expecting bigger discounts.
Not Sears. It is spending more on its stock than on its stores.
Sears cut capital expenditures, or investment in fixing up its stores, by 44 percent for the fiscal year through Oct. 31. And it trimmed inventory spending 5 percent going into the holiday season.
Amid this frugality, the owner of Sears and Kmart stores spent $224 million to buy back about 3.5 million shares at an average price of $64.30 a share in the third quarter, which is more than it invested in capital expenditures in the first nine months of the fiscal year.
Morgan Stanley analyst Gregory Melich called the move a "questionable practice given the state of the store base," in a report Thursday. He estimates Sears' capital spending at $325 million for 2009 and said it should be "at least $1.6 billion."
Even as rival retailers reduced capital spending this year in response to the recession, Sears still ranks as the cheapest among 13 competitors, according to a Nov. 9 Credit Suisse report.
Since 2005, when Lampert took control of Sears and combined it with Kmart, capital spending as a percentage of sales has hovered around 1 percent annually, according to Credit Suisse.
"We are aware and have read numerous times the letters from Mr. Lampert that ... spending for spending sake is not justified," said Credit Suisse analyst Gary Balter in the report. "We agree up to a point, however, maintenance spending is necessary to keep stores looking fresh (and) to bring customers in."
If the stores look dreary or dirty, shoppers go elsewhere, Balter said. It is a lesson retail outsiders often fail to grasp.
Yet, it is also a market reality that when firms buy back their own stock, the stock price goes up because there are fewer outstanding shares. Lampert, through his exclusive hedge fund RBS Partners, owns 56 percent of Sears. It is the fund's biggest equity investment.
Sears' stock price under Lampert has seesawed from as high as $193 in April 2007 to as low as $34 this past February. Shares fell $2.82, or 3.7 percent, to close Thursday at $72.95, putting Sears' market value at $8.7 billion.
Sears officials declined to comment beyond the earnings release.
Sears is investing in its online business and free-standing home appliance stores, a test concept that has had some promising early results. Some analysts interpret these steps to mean Lampert is biding his time until he can get rid of Sears' real estate and move most business to the Web.
For the quarter ended Oct. 31, Sears reported a loss of $127 million, or $1.09 a share, compared with a loss of $146 million, or $1.16, a year earlier.
Revenue fell 4.4 percent, to $10.19 billion. Sales at stores open at least a year, a key retail metric, fell 4.6 percent at Sears' U.S. stores and rose 0.5 percent at Kmart.
smjones@tribune.com
chicagotribune.com |
| | Sears Holdings Corp. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: Glenn Petersen | 3/27/2010 6:02:05 AM | | | | | | Stuck with Sears
Five years ago, when Eddie Lampert merged Kmart and Sears into a mega-retail holding company, the hedge fund guru was hailed as the Next Buffett. Then came the crash...
By Roben Farzad and Michael Arndt
Business Week
March 25, 2010, 5:00PM EST
Our story begins with a tale of two Buffetts: the real one, of course, and the financier who five years ago was being hailed (by this magazine, among others) as the Next Buffett.
For the real Buffett, business is good these days. Warren Buffett's annual letter to Berkshire Hathaway (BRK.A) shareholders, released in late February, celebrated a triumphant return to form. By seizing opportunities, he wrote, Berkshire had emerged from the Panic of '08 stronger and more profitable. "When it's raining gold," he crowed, "reach for a bucket, not a thimble."
For the Next Buffett—hedge fund guru Edward S. Lampert, 47, who had posted 29% average annual returns since founding his fund in 1988, then created Sears Holdings (SHLD) in 2005 by stitching a deeply wounded Kmart to Sears' once-venerated brand—business is not so good. Lampert's shareholder letter, released around the same time as Buffett's, came out swinging at the critics who now outnumber his fans. Lampert blamed journalists, analysts, and rating agencies for much of the trouble plaguing his retailing empire, arguing that they apply a double standard to Sears Holdings when they blame "our investment choices for our declining sales" while citing the economy for sales declines by rivals like Wal-Mart Stores (WMT) and J. C. Penney (JCP).
Still, Sears Holdings has performed 19 percentage points under the Standard & Poor's 500-stock index since its creation in 2005, and 29 percentage points under Wal-Mart during the same period. Contrast that with Buffett's Berkshire Hathaway. It has posted results that outperformed the S&P 500 in four of the past five years—27 percentage points better than the market in calamitous 2008.
Lampert can point to improvements recently at Kmart. Throughout 2009, Kmart had smaller declines in same-store sales than Target, and it beat Wal-Mart by this metric in the last two quarters, too. He has closed 66 moribund Sears stores, which he says raises cash in most cases, and he has a new effort afoot, applauded by some analysts, to make Sears' signature brands, Craftsman and DieHard, available through other retailers for the first time.
This will create a new revenue stream, but other analysts worry it will also mean there's less reason for customers to walk into a Sears, especially if Lampert begins selling Kenmore appliances outside. "Kenmore is Sears," says Credit Suisse (CS) analyst Gary Balter. "The moment they take that outside the store, they could lose a big, big part of their traffic."
As risky as they may seem, such moves are not likely to turn the tide Lampert's way, according to company watchers. "If he has a strategy other than cutting costs, I haven't seen it," says James E. Schrager, professor of entrepreneurship and strategy at the University of Chicago's Booth School of Business. "What is their concept?"
Tactical retailing decisions of this kind are no doubt necessary, but they're a long way from the bold financial stratagems analysts expected from Lampert when he burst onto the scene five years ago with the creation of Sears Holdings. The Buffett comparisons were based on his approach as much as on his gaudy results. Just as Buffett had turned a listless New England textile maker into one of the most successful investment vehicles in history, Lampert would use a rejuvenated Sears as a Buffett-like holding company with which to mount acquisitions, some to keep and grow, some to be flipped for cash. Sears Holdings would be both a dynamic investment vehicle and a brilliant retailer.
At the moment, Schrager and others say, it is neither. Although downmarket retailers tend to do relatively well in recession, neither Sears nor Kmart has snapped out of its senescence. Sales are down and keep falling. Per-store sales have declined for the past five years, and total revenue has slumped to $44 billion, its lowest level since the 2005 merger. Net income is slipping and, according to its filings, the company has spent more on stock buybacks than it has invested in stores or acquisitions. No one, other than Lampert, who controls 53.1% of the company (despite having sold 4.6 million shares in March), seems to have staying power in the C suite. Sears remains without a permanent CEO, having gone through three with Lampert as chairman. An interim CEO, W. Bruce Johnson, has been in place for two years as a protracted head hunt goes on.
Along the way, Lampert has starved the stores of capital spending, according to Balter, while doling out $5.43 billion on those share buybacks to help lift per-share results. This lack of spending, Balter says, has a direct impact on the quality of the shopping experience. And soon the customers won't have to visit Lampert's stores to buy his best products.
Johnson acknowledges the risk that moving Craftsman and DieHard into new retail channels could cannibalize sales at Sears and Kmart. Still, he argues, the gamble is worth it. "We have great potential, unrealized potential to this point, with our major brands," Johnson says. "But we're not going to do that recklessly and without thought."
By the company's own reckoning, however, previous retail restructuring efforts have fizzled. At first, Lampert proposed turning Kmart stores into Sears locations, which would move Sears beyond conventional malls. Before the deal was completed in March 2005, Sears bought 50 sites from Kmart. The post-merger plan was to convert them and hundreds more into freestanding Sears stores.
These new off-the-mall stores were called Sears Essentials and carried goods from both retailers, mixing Kenmore appliances with Martha Stewart housewares. After several stabs at finding the right chemistry, the company pulled back. "We found we just couldn't get the kind of sales and profit lifts to justify the investment in these stores," Johnson says.
Kmart and Martha Stewart parted company in January. Stewart had few kind words for Kmart or Sears as they were breaking up last fall, claiming in a CNBC interview that the retailer had sullied her brand. "The quality is not what I am proud of," Stewart said. "Have you been in a Kmart lately? It is not the nicest place to shop." She now sells her line through Macy's (M).
Sears points to a conciliatory press release that Stewart issued after that interview. "We wish our friends at Kmart and Sears Holdings all the best," it said. Besmirching Kmart "was not my intent."
Sears execs also say that in the years after Lampert acquired the companies, they were bogged down in integrating the two chains, then got walloped by the recession. As for why Lampert never followed the path of his idol into a Berkshire-like acquisition mode, the credit crisis of 2008-09 explains much of it. Some analysts also think Lampert overlooked a major component of the Buffett model. "When Buffett buys a company, he bets on management; that's his No. 1 principle," says Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm in New York. "Buffett learned long ago how insane it was to run a fabric mill on his own. So how is Lampert, a guy with a hedge fund in Connecticut, running Sears and Kmart?"
Lampert, who declined to comment for this story, still has his fans. "Profitability, even if done by managing inventory and cutting costs, is good," says Ivan Feinseth, chief investment officer of AlphaWorks, a New York hedge fund bullish on the shares though it has no stake in the company. "Look, are there better places to shop? Absolutely. But Sears is an option on Lampert, not as a retailer, but as a financial engineer."
Lampert's own view, as expressed in his latest chairman's letter, is that Sears Holdings is doing pretty well given the crummy economic environment of the past two years. The real problem, he insisted, is that too many people who follow the company misunderstand how it works. "We hope that those who may have doubted us in the past are willing to keep an open mind," his letter stated. "In our case, it turns out that our performance far exceeded many observers' expectations and we hope to receive credit for this performance in the form of higher credit ratings and more balanced analysis. Simplistic analyses, which automatically prefer capital investment to share repurchases as a use of cash that 'benefits' bondholders, ignore the fact that negative or below market returns on invested capital are as harmful to creditors as to shareholders."
Lampert has a point, but he overlooks another one. His preference for buybacks over capital investment necessarily disadvantages his retail operations—yet he has insisted that he took over Kmart and then Sears because he wanted to operate them as retailing companies. Analysts have just as consistently seen a different motive. They looked at the chains and their combined count of nearly 4,000 stores as a real estate play, hard assets that Lampert bought cheaply and could flip for a fortune.
Consider that in 2004 Lampert sold some 65 Kmart stores and acreage to Home Depot and Sears for $946 million. The analysts' conjecture seemed to be seconded in late 2004 when Vornado Realty Trust (VNO) bought a 4.3% stake in Sears as Lampert was about to merge it with Kmart. (Vornado sold its shares by yearend 2005, for a net gain of $26.5 million.) Since then, though, the Sears chairman has only dabbled in small deals. In 2007 he sold the Sears' Canadian headquarters in Toronto to Ontario for $81 million (Canadian), leasing back the space. That same year he also got a $21 million pretax gain by selling the chain's fashion center in Los Angeles to an undisclosed buyer.
In today's commercial real estate glut, fewer buyers would want Kmart's big boxes or the Sears stores that anchor suburban shopping malls. "The market for this kind of space right now is relatively nonexistent," says Neil Stern, senior partner with McMillan Doolittle, a Chicago retail consulting firm. "There's a flood of vacancies, large-scale bankruptcies, and department-store brand consolidations."
"What Lampert did years back was brilliant," says Stern. "He sold Kmart stores to Sears, got cash, and turned around and bought the whole company. Everyone then extrapolated that he could keep doing that. But times are different." On the other hand, Sears was able to expand deeper into small-city markets with what it calls Hometown stores, which are independently owned and staffed to Sears' specifications. It has more than 1,000 today, after adding 60 last year, and it plans to add 100 more in 2010.
Sears is also testing a new concept at a single location in suburban Chicago. Called Mygofer, it's essentially a huge, well-stocked warehouse where shoppers can pick up goods they've ordered on the Internet at home, on their smart phones, or at kiosks in the store.
Such moves cost Sears little in capital expenditures, which must be attractive to a man who doesn't like to pump money into bricks and mortar. This reticence is why Lampert is often faulted for neglecting the company's stores. Balter, the analyst with Credit Suisse, says too many stores are typically dirty and out of stock. "Customers have a choice every day," he says. "Why are you going to go there? That's the challenge."
That may help explain why the company's same-store sales have declined every year under Lampert's ownership. Sears has consistently underspent its rivals on capital investments. The company committed $361 million in capital spending in the year that ended Jan. 30, less than the $424 million it spent to buy back shares during that period, according to company documents. Compare that with the capital spending by Target ($1.73 billion) and Wal-Mart ($12.2 billion) over the same period.
Lampert has dismissed these comparisons from the start, as does Johnson. Yes, the CEO says, shoppers might happen upon faded outlets, "but most of the stores look pretty good." And capital investment doesn't automatically produce higher sales.
At a Kmart in Chicago, customers say they come for the low prices. Laura McBride, a homemaker shopping with her husband, Richard, a pipefitter, prefers it over Wal-Mart and Target. She shops at Kmart twice a week, after scanning ads for what's on sale. "I love the prices," she says. "Kmart fits my budget. I find more sales here. Things are cheaper."
Those low prices hurt Kmart's performance. Balter thinks it would be better off if Lampert sold Kmart and focused on Sears. He notes that on a per-square-foot basis, Kmart is only a quarter as productive as Wal-Mart, but concedes that a sale or spinoff is highly unlikely in the present retail environment.
Although Sears is smaller than it used to be, it still is a retailing behemoth. It is the nation's fourth-biggest general retailer, behind Wal-Mart, Costco (COST), and Target, with fiscal 2010 sales of $44.04 billion and 3,921 stores. Including Canada, it has more than 300,000 employees. Sears, in 2001, was far and away the biggest vendor of big-ticket household appliances and white goods with a market share of 41%. It's still No. 1, though that share is now 31.7%.
Sears' gross margin came to 27.7% in fiscal 2010, which ended Jan. 30. The margin has ranged from 27.1% to 28.7% since Lampert merged Sears with Kmart in early 2005, according to company Securities & Exchange Commission filings. Target regularly posts margins of 30%, thanks in large part to its greater volume of high-priced consumer electronics. Wal-Mart lags both, with gross margins of 23.5% over the past few years. Wal-Mart, however, relies on food for almost half its revenue and the grocery business is notoriously low margin.
Lampert has always contended that his rivals are spending money on store expansions and updates foolishly, writing in one of his annual letters: "We do not subscribe to the view (seemingly widely held) that more is better, or that there is a certain amount that must be spent on cap-ex every year." With 2,235 full-line stores between Sears and Kmart today, the company has more than Target (1,684), J. C. Penney (1,110), or Kohl's (KSS) (1,060). "The issue for Sears Holdings is therefore not one of building more stores, but rather one of making our existing stores more productive and relevant to our customers," Lampert argued.
Ana Lai, an analyst with Standard & Poor's, says store counts tell only part of the story. "The operating performance has really been below expectations. Its competitive position has really deteriorated against peers such as J. C. Penney, Macy's (M), and Kohl's. Their execution hasn't been all that good either. They need to invest in their stores to make them more attractive and to provide shoppers with a better experience."
Lai is still looking for the promised sales synergies between Kmart and Sears. "The longer this continues, the more their position will weaken." She sees nothing in Sears' strategy that pulls the company out of its "manage-the-decline" slide.
None of these analysts, in fairness, has had to manage two aging retail chains through an epic recession. So it's worth asking: Where would Sears and Kmart be today if this presumptive New Buffett hadn't swooped in five years ago? Probably in worse shape than they are. Other marginal retailers—Circuit City (CCTYQ), Linens 'n Things—have folded. Feinseth of AlphaWorks sees no other hope for once-bankrupt Kmart vs. the duopoly that is Wal Mart-Target.
Indeed, all the tangible goodwill of Sears' many household brands seems to pale in comparison with the intangible premium of Lampert's name. According to Bloomberg data, Sears shares, at their 107 close on Mar. 22, enjoy a $40 premium over analysts' average 12-month price target—tops in the S&P 500.
Managing a business and managing lofty expectations are two very different things.
BusinessWeek Senior Writer Farzad covers Wall Street and international finance. Arndt is editor of BusinessWeek's innovation and design coverage, overseeing its Innovation channel as well as the magazine's quarterly IN: Inside Innovation section.
businessweek.com |
| | Sears Holdings Corp. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: Glenn Petersen | 12/22/2010 7:41:30 AM | | | | | | I went to my local Sears earlier week, which is located in a high end mall. The store had very few shoppers relative to the other stores I visited.
A Tough Sell at Sears
December 21, 2010
New York Times
By STEPHANIE CLIFFORD
This holiday season, Sears and Kmart, which merged in 2005, are pushing a single message: Buy with layaway, buy with coupons, buy now and pay later, buy with loyalty rewards points — but please, just buy.
Five years after the merger, Sears Holdings is beleaguered, with sales markedly worse than its competitors’. The company’s revenue dropped more than 10 percent from 2005 through 2009, the most recent full fiscal year. In the same time period, Wal-Mart’s sales rose almost 31 percent, Target’s more than 24 percent and Macy’s about 5 percent. Sales at J. C. Penney’s declined by about 6 percent.
Recently, too, as shoppers seem to be cautiously loading their carts again, Sears Holdings has not benefited. In the first three-quarters of this year, Sears Holdings’ sales are down about 1.9 percent compared to the same period last year, while the competition moved into positive territory.
Edward S. Lampert, the billionaire hedge fund manager who engineered the merger and is chairman of the company, has promised that Sears Holdings will be “unrecognizable” in 30 years. To drive sales, it is emphasizing online shopping, mobile apps and an Amazon.com-like marketplace with other vendors, along with heavy promotions in stores.
Still, its long-term strategy remains murky, analysts say. Sears Holdings is primarily a physical retailer, and many of its 2,200 stores in the United States are run-down and in undesirable locations. Among discount stores, Kmart lags Wal-Mart and Target. Sears is trying to edge out Lowes and Home Depot in appliances on the one hand, and Macy’s and J. C. Penney in apparel on the other.
“People assume that Eddie’s got some magic formula,” said Gary Balter, an analyst with Credit Suisse. “If you’re Sears, you’ve got a problem because you’re trying to sell a product in a dilapidated building,” he said. And Kmart stores are “about a quarter the sales productivity of Wal-Mart,” he said. “How do you compete?”
When Mr. Lampert combined Kmart and Sears in an $11.9 billion deal that went through in 2005, many of the same analysts considered it a smart move.
Mr. Lampert, who became the majority owner of Kmart after it went into bankruptcy, said then that he wanted to combine the best of both, putting brands like Kenmore and Craftsman into Kmarts, and building Sears’s presence outside of malls by turning some stand-alone Kmart stores into Sears stores. Some attractive store locations, particularly in urban areas, led analysts to believe he could sell those to competitors for premium prices.
But the sudden consumer pullback in 2008 led to lots of empty retail space, at less expensive prices than Mr. Lampert’s. Today, Mr. Balter said, Sears Holdings still has some showcase spots, in high-end, high-traffic areas like Bergen County, N.J.; South Coast Plaza in Costa Mesa, Calif.; and in Manhattan and Bridgehampton, N.Y.
But much of the remaining real estate in older, decrepit malls is a problem, Mr. Balter said. “Of the 2000, there’s 1,500 that you don’t want to be in, that nobody’s going to buy,” he said. (It also has a growing division of about 1,600 specialty stores, like small hardware stores and outlets. ) The better locations “are where Sears and Kmart are making their money — if you sell those, what are you going to be left with?” Mr. Balter said.
Mr. Lampert has also not invested much in the stores themselves, analysts said. In 2009, capital spending only amounted to 0.82 percent of sales. That is about half of Macy’s spending, at 1.51 percent of sales, and a fraction of the spending at Target, Wal-Mart, J. C. Penney and even publicly traded dollar stores, all of which are at 2 percent and above.
In an interview, David Friedman, Sears Holdings’s new senior vice president and president of marketing, played down the importance of appearance.
“The customer’s experience is made up of lots of pieces,” he said. “The in-store experience is one of those that matters a lot, and we believe that the physical plant is one piece of it, but we believe the associates and the products drive the in-store experience.” Sears Holdings is experimenting with new layouts and fixtures and will introduce those more widely if they are shown to improve sales. And Tom Aiello, a Sears spokesman, said in an e-mail that brightness and cleanliness were priorities, and noted that customer-satisfaction scores had risen this year.
The stores’ products pose another challenge.
Sears has long commanded the appliance world, but Home Depot and Lowes are formidable up-and-comers. In 2009, Sears still led the group with a little more than $7.1 billion in major appliance sales, according to This Week in Consumer Electronics magazine and the Stevenson Company. But its appliance sales fell 8.2 percent that year. Lowes came in second, with $4.5 billion, up 3.8 percent, and Home Depot was in third with $3.4 billion, a 4.3 percent decline.
“That’s increased the competition for sure,” Mr. Friedman said, but he added that Sears’s employees and price-matching gave it an advantage. Sears is also now selling some exclusive brands outside its stores. Craftsman tools, for instance, are available at some Ace Hardware stores.
It is also trying to figure out apparel sales. In its high-performing stores, it has been able to sublease space to the teenage retailer Forever 21, and it is trying to lease other spaces to other brands.
New exclusive brands, like a fashion line by the Disney star Selena Gomez at Kmart, and ones by the British brands Next and French Connection, are the latest efforts to lure shoppers.
“When you have things that are more on trend,” Mr. Friedman said, “aligned with people that are more compelling, they’re more willing to take a separate trip to your store.”
But exclusives may not hold the same cachet anymore. Kmart may have signed Selena Gomez, but Target has Demi Lovato, Wal-Mart has Miley Cyrus, Kohl’s has Britney Spears and so on.
Transforming Sears or Kmart into fashion destinations will be difficult, said Jason Asaeda, a retail analyst at Standard & Poor’s.
Mr. Friedman said that customers were “more willing to purchase fashion at a Sears than at a mass merchant,” and described Kmart’s fashion efforts as having a “very good response.”
Aside from working on appliance and apparel, Sears seems to be putting the most weight behind its promotions and Internet efforts.
Through a program called AdYourWay, shoppers can choose an item online and direct the site to notify them when it reaches a certain price, or ask the site to recommend products. Mygofer lets people shop online for basics like eggs or bread along with tools or gifts, and pick up those items in a store the same day. Sears Holdings has several mobile applications to help people choose gifts or order items. Earlier this year, it formally announced Sears Marketplace, where more than 18 million products were available via third-party sellers. And a single login and profile can be used across all Sears Holdings sites, like LandsEnd.com or TheGreatIndoors.com.
Analysts said that while they were impressed with the company’s forays online, they did not see the Web sites as a cure-all. The retailer is also trying to lure shoppers with promotions. It extended its popular layaway program this year, and is also running no-interest offers on the Sears credit card and buy-now-pay-later plans with monthly payments. It began a rewards program at Kmart last year and Sears this year, offering points for buying and activities like writing reviews online. It is also offering holiday-season promotions, like offering Black Friday-level pricing on weekends beginning in October, and keeping Sears and Kmart stores open on Thanksgiving day.
For longtime shoppers like Linda Formicola, the rewards are a nice bonus, but it is Sears’s history and good discounts that bring her in.
“We’ve been shopping at Sears since I can remember,” said Ms. Formicola, 43, of Franklinville, N.J. Her husband is a mechanic, so he picks up tools there while she looks at clothes and supplies. “If stuff’s on sale, it’s pretty much the same price as you’d buy at a Wal-Mart,” she said, adding she believed the quality was better at Sears.
Bill Dreher, an analyst with Deutsche Bank, acknowledged that the company had maintained some loyalty among shoppers, but said he was puzzled about its future. While an asset mix including brands like Kenmore and Lands’ End, real estate holdings and the successful Sears Canada division may be valuable, retailing magic seems to be lacking in Mr. Lampert’s vision, he said.
“He’s got this huge conglomerate of retailing which is really not doing very well right now, and frankly, if it weren’t for Sears Canada, would be in a real mess,” Mr. Dreher said. “He’s focused so much on reducing costs and driving cash flow, and not focusing on sales and market share.”
Cheryl Thomas-Gorny, a mother of three in McRae, Ark., may not be concerned with Mr. Lampert’s market share strategy, but shoppers like her contribute to Sears’s diminishing popularity and sales. Although she said she sometimes shopped at Kmart, she criticized the quality of its goods, and said she often found the employees disagreeable.
“Honestly, I’d rather go to Target,” she said.
nytimes.com |
| | Sears Holdings Corp. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last ReadRead Replies (1) |
|
| To: Smiling Bob who wrote (823) | 12/22/2010 10:20:35 AM | | From: Glenn Petersen | | | | While Lampert was able to monetize the low hanging fruit, he is operating on the assumption that he can maintain profitability by cutting costs and capital expenditures in the face of declining revenue. While that may work in the short run, it is doomed to failure in the long run as you need a certain level of activity to cover your fixed costs. I am avoiding SHLD until I see a plan to “fix” the stores. It may be too late.
Sardar Biglari has pursued a similar strategy (cutting capital expenditures) with Steak n Shake, but with one important exception. He is changing the business model of the company. Instead of having Biglari Holdings actually own their restaurants, he is selling them off to his franchisees.
Subject 57402 |
| | Sears Holdings Corp. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last ReadRead Replies (1) |
|
| From: Sr K | 1/12/2011 1:28:58 PM | | | | | | Press Release
Source: Sears Holdings Corporation
On Wednesday January 12, 2011, 12:00 pm EST
ORLANDO, Fla., Jan. 12, 2011 /PRNewswire/ -- The Craftsman brand debuts a one-of-a-kind, time-saving technology for its cordless line of 12-volt lithium-ion NEXTEC power tools this week at the 2011 International Builders' Show (IBS), Jan. 12-15, 2011, in Orlando. With its new QuickBoost™ Charger, Craftsman does something that no other major brand can—bring a completely dead battery back up to a 25 percent charge in three minutes, providing the extra "boost" needed to finish up the job at hand. The new charger hits store shelves this spring.
finance.yahoo.com |
| | Sears Holdings Corp. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: Smiling Bob | 1/20/2011 3:57:05 AM | | | | | | Sears Holdings: Outlook Declines for Operations, Improves for Shareholders
15 comments | by: Frank Voisin January 18, 2011 | about: SHLD
*
Font Size:
*
Print
* Email
*
Recommend
0
Share this page
Share0
Frank Voisin picture Frank Voisin
67 Followers
Follow
Send Message
You are currently following Frank Voisin
Stop Following
You are no longer following Frank Voisin
* Articles (22)
* Instablog (20)
* StockTalks (1)
* Comments (19)
* Profile
About this author:
* Visit: Frankly Speaking - A Value Perspective
Submit an
article to back to yahoo finance
This past week, Sears Holdings Corporation (NASDAQ:SHLD) announced that its same store sales had declined by 1.7% in December. The company’s revenues are now at a five year low, and many claim that no one in their right mind would choose to shop at Sears if an alternative exists nearby. Despite this, the company raised its guidance to $3.39 – $4.12/share vs. an average analyst estimate of $3.12. How does it justify this?
SHLD is 56.9% owned by Eddie Lampert’s hedge fund, ESL Investments, which also operates the company (side note: Bruce Berkowitz’s Fairholme Capital Management also owns 13.1% of the company). Lampert has been actively repurchasing shares for years, at a rate of about 10 million per year (from 154 million outstanding in 2007 to just 110 million today, representing a decline approaching 30%). This is a classic example of the outlook for operations differing from the outlook for shareholders. In essence, as the company’s operations decline, the number of shares outstanding is declining at a much faster rate.
Bespoke Investment Group recently wrote about the decline in share count (here) and how if you back out Lampert and Berkowitz’s holdings, the remaining shares outstanding is just 28.8 million vs. a short interest of 12.1 million! An improvement in operations with the effect of sending the shares higher could trigger a massive short squeeze. |
| | Sears Holdings Corp. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last ReadRead Replies (1) |
|
| |
