Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Sears Is Ready for the Nursing Home

|Includes: Sears Holdings Corporation (SHLD)

How can you tell how many people are working at your local Sears store?... Count the number of cars in the parking lot.

With a forward PE of 28, the shares look expensive even after a 27% decline.  Worse, home appliance sales are due to take a hit as the RE market absorbs the expiration of the tax credit and a backlog of foreclosure supply.  That hangs the retailer's hopes on tool sales as lower cost and greater selection competition from the likes of Lowes, Home Depot and Menards continue to eat away at market share.

But wait!  Sears' hard on the eyes trophy bride, Kmart, seems to be doing alright, selling toys, home decor, and whatever else Target and Walmart stocked out of that week.  Inventory supply numbers show that Kmart's days of benefitting from recession era inventory reductions at its competitors is over.

Even the senile retiree has at least one retirement savings ace up his sleeve, and for Sears it's the commercial RE holdings it obtained in the Kmart acquisition.  Unfortunately, an aging, shuttered Kmart store with grass growing in the parking lot on the "used to be growing" side of your urban sprawl town draws less investor interest than a CDO with a AAA stamp.  Sears Holdings has yet to move any of the 14 or so locations it's trying to sell.  When the Kmart moved out of these locations as many as 20 years ago, everything around them died or left too, and the new section of town emerged around a competitor's store.  The sheer size of an abandoned Sears or Kmart store trims the number of potential tenants down to its competitors and an outside chance at a municipal airport.

The problem with abandoned Kmart or Sears stores is that they look like failure, even after you replace the letters with a new name.  (It would help if you couldn't still read the old letters stained into the building.)  The best thing Sears Holdings could do to move its commercial RE would be to bulldoze its monuments to failure, tear up the parking lot, and start over.  But that takes cash that a crazy old man like Sears will hear nothing of spending.

Disclosure: no positions in RE, commercial RE, or SHLD