DingoJoe

18 Comments

    • While Street Yells 'Sell!' Lampert Buys Back 4% of Sears [view article]
      SHLD is more a cult than a retailer. It is fascinating to watch the debate. Aug 31 07:21 PM
    • Did Borders.com Results Lead to Barnes & Noble Chief's Exit? [view article]
      I hope analyst do ask lots of questions, but BGP isn't very high profile and the questions asked last conference call weren't very probing, so don't hold your breath.

      It's my understanding that the Borders website is now being used in store by employees to order books for the customer when the book is not in stock in the store (whereas previously it was done from the traditional in-store system). Furthermore, given that the new Borders business model involves fewer titles in-store that means greater reliance on whatever system of special ordering they are using. So, the question are, how much of the internet usage/ordering is store driven? and how much of it is replacing lost sales at the store level due to the decrease of titles carried in store?

      I actually would have expected the conversion rate to be higher if Borders is utilizing the system in store to order for customers, but the rollout of the system to stores may have been staggered, so that may explain the big one month jump and why the conversion rate isn't higher.

      Still don't like BGP or Sears/Kmart for that matter as they are all the poorest retailer in their respective segments. SHLD may have value once liquidated, but I just don't see any rabbitt for Borders to pull out of it's hat.       Aug 20 12:19 PM
    • Sears? Bankruptcy? I Think Not [view article]
      I think bankruptcy is absurd, liquidation is possible, which brings us to the neverending debate of how much Sears is vis-a-vis brands and RE and how much that should translate into share price. I really don't want to get into that debate.

      Here are the problems I see with SHLD:

      Sales in 2004 of the entities to be combined as SHLD--55.6B
      Twelve month sales of SHLD after 1Q of 2008--50.0B

      Sales at Domestic Sears and Kmart in 2004--51.1B
      Sales at DS and Kmart 12 month ending 1Q 2008--44.25B (a decline of 13.5%)

      Sales at Sears Canada in 2004--4.5B
      Sales at SC 12 months ending 1Q 2008--5.75B (a 28% increase)

      So SHLD has been losing revenue since it's formation, in good retail years and bad. Sears Canada has hid part of the decline and we'll discuss how and why?

      Let's start with Sears Canada because they look like a star. Why have they done so well? Easy, the Loonie has gone up 25-33% vs the US dollar since 2004. SHLD makes mention in ever report that gains in Sears Canada are primarily currency driven. Will it continue? Near term, it looks unlikely. In fact, for 3Q and 4Q its likely that the Loonie will be below YOY levels which means revenue declines are likely for SC in the second half of 2008. Pressure will also be put on gross margins and cash flow though that is more complicated than revenues and I certainly don't have the information to say how much they'll be impacted. Also, it looks like the housing bubble in Canada is popping and that will pressure sales too.

      Bottomline--Sears Canada not really the star it looked like.

      KMart

      Worst margins. Worst cash flow. In fact, could go cash flow negative. SSS continue to dive, despite being a "discounter" and despite many stores adding Sears product like Craftsman, DieHard, and appliances. Will take the biggest impact of the increase in minimum wage. Will Eddie take this out and shoot it without taking out the rest of the company? Tough call.

      Bottom Line--Ugh

      Domestic Sears/Sears Brands

      Lands End is Swell--An undisputed star

      Die Hard seems solid

      Kenmore/Craftsmen--Bee... losing marketshare for years. Lowe's and Home Depot expand, Sears doesn't (well maybe putting the product in KMart is expansion, but it doesn't seem to be working).

      Bottom line--Sears doesn't grow, it shrinks. Their competitors grow and take marketshare. However, in at least the softlines there are competitors in trouble (Mervyns, Steve and Barry, Linens and Things) can that benefit Sears? maybe.

      Sears RE

      It certainly looks like a huge glut of CRE is going to build on the market over the next several years. Whatever RE value SHLD has will take time to unlock. It will have overhead and carry costs, unless Eddie sells at firesale prices.

      In Sum--I don't own SHLD (except in a mutual fund) and I don't short SHLD. I think they are an interesting case study and I think they are a crappy retailer. I doubt they are worth $100+ a share, I doubt they are worth less than $60 a share. I do think the value is in the breakup, not the retailer.       Aug 10 01:16 PM
    • Sears Faces Risk If Economy Doesn't Improve [view article]
      The $143 million is left over from a prior authorization, since then SHLD has been authorized to buy back an additional $500 million. Aug 07 08:08 PM
    • Slightly Lower Gas Price Doesn't Mean Huge Increases in Consumer Spending [view article]
      Well, Sears/KMart is a crummy retailer so really nothing should help their sales. Ultimately, SHLD will be about whether the real estate and brands have value and can that value be unlocked somehow.

      I think near term,and especially in the 3rd and 4th Q, SHLD could really crank out some awful numbers, in part because of the Canadian Dollar.

      Sears Canada has been really the only star in SHLD, increasing it's margins, revenue and cash flow. It's gone from 8.1% of sales of what would become SHLD in 2004 to 11.5% of sales now and accounted for a whopping 40% of cash flow for SHLD in the 1Q. Unfortunately, it's all been due to a steeply appreciating Loony vs the US Dollar and now for the first time in the SHLD era it looks like Sears Canada will have to post YOY numbers with the Loony actually below previous year values.

      Up til now, Sears Canada had been able to take the edge off some poor numbers posted by KMart and Sears Domestic. If Sears Canada has to start adding negative numbers on top of bad KMart and Sears Domestic numbers, look out.

       Aug 06 02:26 PM
    • The Fed Is Still Expecting Inflation to Moderate [view article]
      If you can borrow from the Fed rates are low. If you have to borrow from a bank or other entity in the free market, rates aren't so low and fees and other terms make the credit environment pretty tough.

      In many ways it's not much different than all the tricks the airlines are resorting to in order to compensate for high oil, except in the banks and other financials they are trying to compensate for the era of high stupidity.       Aug 06 11:58 AM
    • Parsing Paulson: The Fannie and Freddie Bailout [view article]
      Felix Salmon's comments will have as much impact on the ultimate outcome of this mess as Chuck Schumer's comments had on IndyMac.....oh, crap! Jul 14 12:56 AM
    • Housing: Barron's Calls a Bottom [view article]
      BR over at the Big Picture had great fun poking holes in this one and pointed out some huge misfires by Barron's over the last 6 months

      bigpicture.typepad.com...       Jul 14 12:50 AM
    • May Subprime Data Likely to Show Continued Improvement [view article]
      So, what did the actual released report say? I did see a story on Housing Wire in reference to the Clayton report saying that Alt-A loans deteriorated sharply in May.

      www.housingwire.com/20.../       Jun 26 01:02 PM
    • Hedge Funds Unhappy With Brokers' Efforts To Raise Capital [view article]
      Gee, I bet prime brokers aren't real thrilled with their hedge fund counterparts either. I think prime brokers are a fairly finite group located in investments banks that happen to have their own problems right now, problems that the hedge funds have done plenty to aid and abet. Good luck with finding other sources you hedge fundies. Jun 19 09:27 PM
    • Retailers Leading the Way? Not Really. [view article]
      I believe your thesis is correct, but the math is off somehow. A 6% increase in gas sales plus an 11% increase in food sales and flat merchandise sales can't add up to a 13% increase in SSS.

      Actually, gasoline sales must have jumped by way more than 6%. The gasoline sales accounted for almost half of the stores sales increase. While BJs doesn't provide the info, gasoline sales had to have been up 25-30% or more in dollars.       Jun 13 03:53 PM
    • Debt Datapoints of the Day [view article]
      I find the lottery statistics to be extremely dubious. I'd have to see some serious documentation of those numbers to believe them. Jun 11 12:04 PM
    • Moderation of Revolving Credit Is Not Good News [view article]
      I dunno. It seems that SSS for Sears, Lowes and HD (more than half of the appliance market) were too weak to support this theory. Jun 10 10:23 AM
    • Borders to Sell Paperchase: A Good Short-Term Move [view article]
      A Message From George Jones
      Wed May 14 2008

      "We are moving forward rapidly on our path to significantly reduce expenses. As you know, we've been working with an outside consulting firm to help us in this process and have an internal team that is focused on getting our expenses where they need to be to operate in this challenging economic environment, as well as properly position our company for the longer term.

      To address payroll expenses, we have already put on hold or decided not to fill many open positions, such as the Chief Marketing Officer post. Today, I am announcing a next step that is a difficult, but necessary one. We have made the decision to eliminate several positions at the director and vice president level. The individuals impacted by this decision have been informed over the past few days and we are working with each of them on transition plans. They include: Susan Zewicke, VP, Seasonal Business, Airport, and Corporate Sales; Myles Romero, VP, Strategic Marketing and Entertainment Alliances; Julie Janusz, VP, Strategic Planning and Organizational Development; Beryl Needham, VP, Merchandising (Proprietary, Fiction, Diversity, and Bargain); Gordon Eiland, VP, Paperchase Strategy and Business Development; Susan Mann, Director, Benefits; Tom Dwyer, Director, Fiction and Proprietary; and Carey Wallace, Director, Internal Audit.

      I'm sure you can understand that the decision to eliminate these positions was extremely tough, as these individuals have made significant contributions to our organization. I want to thank each of them for their hard work and dedication and wish them well going forward."

      Ruthless turnaround or death-spiral? Always hard to tell.       May 18 10:27 PM
    • Borders to Sell Paperchase: A Good Short-Term Move [view article]
      I guess Borders needs the money to finish their new website. George Jones had said on the March 20th Earnings Call that it'd be rolled out by May 3rd, but it's still a no go. In fact, the company website hasn't worked at least since Friday (try going to bordersstores.com and getting investor information). Things seem to be dragging with the construction of their new concept store here in New Orleans too. October seems pretty unlikely. Granted these are little things, but they do add up.

      I'm personally rooting for Blockbuster-Circuit City to buy Borders. Just think of the synergies!       May 18 10:37 AM
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