dingojoe

Steer Clear of Sears - Barron's

Actually, I thought it was a fairly decent article. Mr. Laing notes that SHLD's perceived value is in the real estate and the brands. He also correctly notes that it's hard to see on the horizon anyone paying for those assets. The author also provides the mea culpa that in 2007 he wrote an article suggesting there was $300/share in value in those assets.

Basically it's a contest to see if Lampert can keep a poor retailer he hasn't invested money in (preferring to buy back stock) alive long enough to realize any value on the assets, at some point over the horizon. Thsi quarter's numbers are a blow to the idea that he can.

Sure, all retailers have been affected by the GR, but SHLD has clearly been the laggard. They've also been trapped by their Real Estate to an extent. They own and have long term leases on plenty of poor performing store, so even though they're closing about 80 boxes this year they've still got plenty of dogs left.

One thing I didn't see mentioned was the inventory which only dropped from 9.8B to 9.4B YoY. Considering a 3-4% decline in store count (of big boxes) and a 10% drop in sales, that's an awful lot of inventory which will put pressure on margins. And if you've visited stores lately, you could rightly wonder where is the inventory anyway?