Sears Holdings: Whatever Happens in Earnings Announcement, I'm Not Selling

Before the market opens Thursday, Sears (SHLD) will announce Q1 2008 earnings. The current estimate is $1.22 a share vs. $1.10 last year. What will investors be looking for?

1- Same Store Sales:

Sears, despite constantly improving profitability, has experience a steady decline here. Investors seem to want to see a bottom. If this number comes in flat or up, watch for an immediate run in the stock. Much has been said about the importance this metric has and that it is not a "be all end all," but, if it is the one folks follow, then we need to pay attention to it.

2- The Cash

Has Lampert done anything with it? Did he maybe buy Citigroup (C) shares for Sears and ESL? Has he invested it anywhere else?

3- The Swaps

These have been the only real investments outside of the retail operations. How are they performing? Did he liquidate them? Did he increase them?

4- The New Ad Campaign

Having seen it, I think is is great and have not seen anything close to this good from Sears in recent memory. Initial results from it may be available and anything said about it will be of interest.

5- Results

Believe it or not, the actual earning numbers may take a back seat to the previous questions, assuming no large variation to expectations. Retails results have been mixed this quarter, so a small beat or a miss may not be as important to investors as having answers to the other questions.

What will results be? With Sears not giving any guidance, any estimate is just a guess. I do know one thing: no matter what happens, I am not selling.

Disclosure: Author is long SHLD.

SHLD 1-yr chart:

Comments

[cranmer:]

I' m not selling either. Something happened to SHLD today.

2007 May 30 04:10 PM

[Echo To All:]

then what compels you to keep holding the stock? is it faith in management?

i mean the fundamental story here is not that good. management has a lot of options with that cash position they have built, and i am not about to go against one of the smartest investors on the street- as he would know how to utilize that cash- but when do you say enough?

when is the declining same store sales enough until they have to buy their way out of it?

is it no longer a retailer, is it a public hedgefund?

when do investors stop 'hoping' an Ad campaign works?

i'm in JCP, so I hope they produce good fundamental retail numbers to lift up the sector. But the only thing that strikes me as compelling about SHLD as a potential investor is its cash, and the minds behind the cash. I guess that could be enough reason to hold for the long-term... it has worked so far (at least for the stock).

2007 May 30 04:20 PM