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Credit Card Spending Surges, While Retailers Slump

Despite all its reported troubles - Sears has generated a billion dollars in FCF annually in the past 2-3 years. It has a 600 million in buy back authorization remaining and an undervalued share price (and heading lower likely) to boot. What's not to like?

I give Eddie Lampert credit - the worst thing he could do is to spend money like crazy to try and make Sears into a WMT or COST. Clearly, no amount of money will make it into COST ot WMT.

I don't believe the Sears story is about reinventing the retail outfit. It will be about reinvesting the cash flow from operations and from sales of assets profitably. It will take a long time. These problems were not created overnight and won't be fixed in a hurry.

In the meantime Eddie Lampert gets to buy back stock at good prices. If it went down another 50%, I don't think he'll complain. Cheaper the price, better it is for a buyer.


Unless the chronic underinvesting starts hurting the FCF significantly, we should be in good shape. As someone pointed out, Sears' share price troubles are shared by many other retailers despite retail investment in their stores. In this environment, I'd rather have an asset allocator at the helm rather than a retail turnaround specialist.