Newswatcher5

Credit Markets Overstate Sears Bankruptcy Risk

Why is it worth mentioning that Sears has $10 billion in excess inventory of which it owns $7 billion's worth? That much inventory is NEVER a good thing in retail because it means you're being inundated with merchandise THAT YOU COULDN'T SELL IN YOUR STORES. Do you think it's going to somehow be worth that much more at the fire sale at liquidation time than it was to your customers? Again, that much inventory is a liability, not an asset.

Sooner or later you guys are just going to have to let go and admit that the "Golden Boy of retail" and the "Next Warren Buffet" is neither of those things but merely someone who managed to get his hands on a few bucks of someone else's money during a time when anyone with a few million could find all the low hanging fruit he wanted just waiting to be picked.

The low hanging fruit is all gone now and if Eddie Lampert were as brilliant as some of you think he is, Sears wouldn't be in the toilet and he wouldn't have lost 5 billion bucks.


On Dec 23 09:26 AM fcharlie wrote:

> Nice to see an article that presents the asset and liquidity situation
> with facts instead of the typical article that picks and chooses
> specific metrics that do not directly affect solvency, such as same
> store sales, and the appearance of stores, etc...
>
> It's worth mentioning that even as Same store sales declined every
> single quarter from 2005-2007, SHLD generated more free cash flow
> than it's current market cap. And it's also worth mentioning that
> SHLD has $10 billion of inventory, $7 billion of which is fully paid
> for and owned, which secures it's $4 billion dollar revolving credit
> line. To the extent that SHLD may have difficulty renewing or extending
> it's credit line in 2010, you would have to assume that Lampert has
> a backup plan already, and I don't see any reason why his own hedge
> fund couldn't extend a line of credit to SHLD. He will do whatever
> is necessary to insure the solvency of his company.