Bill Herbert

Ackman's Sears Sale: An Expression of His Activism

Did it occur to you that maybe Bill Ackman decided that Sears is a basket case, which will take years to fix after the non-stop mismanagement and devastation wrought by former execs, and Fast Eddie?

Take a walk through the stores - I did. It's not pretty - traffic is poor (but that's true everywhere right now) and merchandise often looks cheap and shoddy. This is the slow-mo KMart-ization of Sears.

The tools and appliances are OK - Craftsman is still a strong brand. But other areas, like electronics, are poorly stocked, and there are few bargains, just a bunch of stuff that is not selling sitting on shelves. Softlines are a wall-to-wall disaster. Housewares and kitchen can't hope to compete with BBBY, or even Penney's for that matter.

Unless Lampert can keep borrowing to buy in shares, giving them a totally artificial boost, this thing could fall into the teens, IMO.

I think Ackman got disgusted and threw in the towel - maybe it is roughly the bottom for SHLD - but I doubt it. I seriously question the premise that because Ackman can't be "activist" enough, he bolted. Rather, I think he feared this would continue to drag down his returns for some time, and that there is no fix available.