Sears (SHLD)

[HenryTo]

Sears Holdings - a hedge fund favorite (and Bill Miller's Value Trust's ninth largest holding) dramatically lower this morning:

http://www.thestreet.com/_yahoo/newsanalysis/retail/10392140.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

And here I thought I had missed out on buying a piece of Eddit Lampert after yesterday's dramatically rally.

[rffrydr]

Discovered a light home-grade lithium tool set, Craftsman, at Costco yesterday. Good move.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Closing 62 retail stores by July. Still about 4,000 stores outstanding.

http://www.bloomberg.com/news/2012-03-16/sears-to-close-62-stores-in-first-half-of-this-year-to-cu.html

[HenryTo]

Shrewd/lucky move by Lampert.

http://www.bloomberg.com/news/2012-02-24/lampert-gains-160-million-buying-sears-shares-from-ziffs.html

[rffrydr]

It's been so long...we forgot about pricing in those hard assets for so long we priced them out
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Definitely having a psychological impact on other vendors/factors. Following courtesy of Morningstar.

[HenryTo]

CIT pulls SHLD supplier credit. I don't think it's justified at this point, particularly given the (slowing) improving US consumer economy. But we will see.

http://www.bloomberg.com/news/2012-01-12/sears-supplier-loans-halted-by-cit.html

[HenryTo]

SHLD outlines turnaround plans. I am sorry but the bathrooms at Borders were disgusting--at least the ones I visited.

http://www.bloomberg.com/news/2012-01-02/sears-chief-says-retail-turnaround-means-melding-tech-with-store-upgrades.html

[rffrydr]

You wanna a leveraged play on the housing sector this is it: Sears is "well positioned" to serve the most rapidly increasing population in the US, latinos. They are, of course, locked in a structural decline overlaying an extreme cyclical one-- more than a match for WalMart's declining dollar.

You need a housing comeback before generational decline gets too far along. You need it for the appliances. You need it for the vibrant grey-economy latinos live in. They also need to take a lesson from restaurants and start fading the white-suede high-pressure appliance salesmen--who don't know chit about their product anyway. Electronics may keep them afloat (they have the "sears card" shadow bank working for them and Amazon et. al. will soon be charging tax. That could be a big swing back to retail. And don't discount to nothing, their RE holdings.

I don't know if they operate out of BK...will be a challenge. I don't expect to take any position here, but another 10% rally on the housing index just might.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

What a disaster. SHLD down 27% today; and FAIRX down 3.4% because of its SHLD holdings.
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Company to close at least 100 Sears, Kmart stores
Sears, Kmart closures spark speculation about whether famous retailer can avoid death spiral

NEW YORK (AP) -- After a disastrous holiday shopping season, the parent company of Sears and Kmart will close at least 100 stores to raise cash — a move that sparked speculation about whether the 125-year-old retailer can avoid a death spiral fed by declining sales and deteriorating stores.

Sears Holdings Corp., a pillar of American retailing that famously began with a mail-order catalog in the 1880s, declared Tuesday that it would no longer prop up "marginally performing" locations. The company pledged to refocus its efforts on stores that make money.

Sears' stock quickly plunged, dropping 27 percent.

The closings are the latest and most visible move by Eddie Lampert, the hands-on chairman who has struggled to reverse the company's fortunes.
As rivals Wal-Mart and Target Corp. spruced up stores in recent years, Sears Holdings confronted falling sales and perceptions of dowdy merchandise.

Some analysts wondered if it was already too late, questioning whether the retailer can afford to upgrade stores as it burns through its cash reserves.

The sales weakness "begins and some would argue ends with Sears' reluctance to invest in stores and service," Credit Suisse analyst Gary Balter wrote in a note to clients.

"There's no reason to go to Sears," added New York-based independent retail analyst Brian Sozzi. "It offers a depressing shopping experience and uncompetitive prices."

Spokesman Chris Brathwaite said no one had determined which stores would close or how many jobs might be cut. He disputed doubts about the company's survival, noting it still has $2.9 billion available under its credit lines.

"While our operating performance has not met our expectations, we have significant assets," including inventory, real estate and valuable proprietary brands such as Kenmore and Craftsman, Brathwaite said.

Sears and Kmart were both retail pioneers. Sears' catalog and department stores were fixtures of American life stretching back to the 19th century before being hurt in recent years by competition from steep discounters and by missteps that included forays into financial services and the decision to sell off a lucrative credit card business.

Kmart helped create the discount-store format that Wal-Mart Stores Inc. came to dominate.

Some customers complained that they have a hard time connecting with the Kmart and Sears of today.

Preschool teacher Sara Kriz, picking up hair conditioner at a Kmart on Tuesday in Manhattan, said she used to shop at Kmart often but now goes there only once every few months: "Only when I have to," she said.

"It seems easier to go to Target and Wal-Mart to get the same thing at the same price," Kriz added. "The stores are cleaner, and they're better stocked."

Sears Holdings has watched its cash and short-term investments plummet by nearly half since Jan. 31, from about $1.3 billion to about $700 million.

The projected closings represent only about 3 percent of Sears Holdings' U.S. stores. And the company has actually added stores since the Sears-Kmart merger in 2005. It has about 3,560 stores in the U.S., up from 3,500 right after the merger, thanks to the addition of more small stores.
But the company hinted that more closings could be on the horizon as it focuses on honing the better-performing stores.

The closings announced Tuesday were expected to generate $140 million to $170 million in cash as the company sells those stores' inventory.

Selling or subleasing the properties could generate more money.

In addition to the closings, the company announced that revenue at stores open at least a year fell 5.2 percent for the eight weeks ended Dec. 25, a crucial time because of the holiday shopping season.

Kmart's layaway program, meant to help cash-strapped customers buy presents by paying for them a little at a time, faltered as Wal-Mart brought back layaway for the holiday season after getting rid of the program in 2006. Sears stores reported softer sales of home appliances, usually a strength.

The company predicted that fourth-quarter adjusted earnings will be less than half the $933 million reported for the same quarter last year. It also expects a non-cash charge of $1.6 billion to $1.8 billion in the quarter to write off the value of carried-over tax deductions it now doesn't expect to be profitable enough to use.

Part of Sears Holdings' problem is the weak economy that is hurting virtually all retailers that cater to low- and middle-income shoppers, who are being forced to cut back on spending.

But both Lampert and Lou D'Ambrosio, who was named CEO in February, have said the company needs to keep up with the changing retail landscape, where shoppers are going online for convenience and finding better prices on their smartphones even once they're in the store.

Andrew Jassin, co-founder at retail management consultancy Jassin Consulting Group, said his fashion supplier clients that sell to Sears aren't limiting orders, but they're watching to see what steps the company will take next.

"People are generally questioning the survivability long-term," Jassin said.
Hedge fund manager Lampert engineered the combination of Sears and Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy. Skeptics criticized the combination as the marriage of two weak companies that would only hurt each other.

But both stores were once giants.

Sears, which started with a lone Minnesota watch seller in 1886, helped define the mail-order catalog industry, selling shoes, clothes, guns and even ready-to-assemble homes to farmers across the country.

Kmart, which started as a five-and-dime in Detroit in 1899, once commanded a retail empire that included Waldenbooks, Borders, OfficeMax and Sports Authority before spinning them off. A long sales decline and an ill-advised price war against Wal-Mart led to its 2003 bankruptcy filing, which let Lampert gain control of the company.

Analysts and investors were initially enthused by speculation that Lampert was combining the companies to unlock the value of their real estate. But years passed without a big move to do that — and commercial real estate values took a painful hit in the Great Recession.

Lynn Crosbie, shopping at a Sears store in Portland, Ore., said she wasn't surprised by news of the closings.

Crosbie said she goes to Kmart for stocking stuffers and was disappointed this year by messy, understaffed stores.

"The quality has gone downhill," she said, looking around the nearly empty store. "Even the cashiers aren't as happy or friendly."

[HenryTo]

Morningstar on SHLD's 3Q earnings:

[rffrydr]

Goes with "incubator" model subleasing inner space.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Terminal Value:

More of the Same From Sears

By Chris Laudani

[HenryTo]

Do you mean the short or the long side? Neither right now, although it may be a good short if retail perks up again.

What's the terminal value of the stock? How much is their real estate worth if the company goes into liquidation mode?

[rffrydr]

Been suddenly and dramatically cut in two: you interested in getting back in, Master H.?
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Playing the distressed asset game:

http://feeds.autoblog.com/~r/weblogsinc/autoblog/~3/aSG_HRtZec8/
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Today is the Tomorrow you worried about Yesterday!