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Make no mistake: Sears (SHLD) and J.C. Penney (JCP) act more like museums than retailers. They've become simply corridors to get to the rest of the mall. The tip off: The two can't unload their inventory. Goods move at a trickling pace and it's killing the bottom line.

Check the length of time it takes these brick-and-mortar retailers to move their goods: Costco (COST), Wal-Mart (WMT), Target (TGT), Home Depot (HD), Sears and J.C. Penney. The chart shows how long it takes to turnover inventory. The longer the days of inventory, the longer dollars are tied up.


(Days of Inventory = Inventory/Cost of goods x 365 days. Data courtesy of Morningstar.com in TTM time frame.)

Any slower inventory management and Penney and Sears might as well advertise in Frommer's Guide to museums.

Penney and Sears have rallied on the promise of change. The real deal must include a credible plan to tackle inventory. For now, investors should take their cue from the "Days of Inventory" and avoid these two stocks.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.

Source: Have Sears And J.C.Penney Become Museums?