Cash Piling Up at Sears Holdings

Recently, Sears Holdings (SHLD) released November and December Comparable Store Sales and a Fourth Quarter Outlook. Once again the bears picked apart the declining same store sales (Kmart -1.2%, Sears Domestic -5.6%) and an unknown derivatives loss that was offset by the sale of real estate. We will have to wait and see the extent of the derivatives loss.

The most promising aspect of the release was that the company expects to end the fiscal year with $3.5 billion in cash and cash equivalents, excluding Sears Canada. In addition, the company did not repurchase any shares during the nine weeks ended December 30, 2006. Authority to repurchase $618 million still remains in the repurchase program.

The possibility of an investment outside of Sears Holdings may occur soon considering the price of the stock remained relatively low over the past nine weeks and the stock was not repurchased. SHLD appears to be stockpiling cash to build on its future growth, which in all likelihood will be in investments outside the realm of the stores (Sears, Kmart, etc.) it owns.

SHLD 1-yr chart: