SHLDQ - Sears Holdings Corp

[PlanMaestro]

More like he was trolling … probably thinking I was part of some sort of shorts cabal. Fun and interesting nevertheless.

 

BTW, what is the standard answer to a yes/no rhetorical question in a title?

 

Can this woman save Sears?

http://www.chicagobusiness.com/article/20130713/ISSUE01/307139978/

[enoch01]

More like he was trolling … probably thinking I was part of some sort of shorts cabal. Fun and interesting nevertheless.

 

BTW, what is the standard answer to a yes/no rhetorical question in a title?

 

Can this woman save Sears?http://www.chicagobusiness.com/article/20130713/ISSUE01/307139978/

 

Time will tell  :)

 

I do appreciate how experimental and data driven they are on some things.  They will beat neither Wal-mart nor Amazon at their own game - Sears needs to play in another sandbox.

[OracleofCarolina]

More like he was trolling … probably thinking I was part of some sort of shorts cabal. Fun and interesting nevertheless.

 

BTW, what is the standard answer to a yes/no rhetorical question in a title?

 

Can this woman save Sears?http://www.chicagobusiness.com/article/20130713/ISSUE01/307139978/

 

Time will tell  :)

 

I do appreciate how experimental and data driven they are on some things.  They will beat neither Wal-mart nor Amazon at their own game - Sears needs to play in another sandbox.

 

This part cracked me up"

Another idea about to be tested involves a display screen that lets a customer select a style and size of jeans, then delivers them via a chute directly to the fitting room."

[texual]

Sears and its leadership is a bit more innovative than people give em credit. So far they've tried so many interesting and unique ideas and are so data-driven that eventually they'll find a way to make things work. Sears had a lot of catching up to do, technologically speaking. After a decade of upgrading their systems and how they manage inventory I think they'll be a lot more successful with a smaller footprint. But my real hope is he invests in other smaller retail concepts and buys other companies with excess cash.

[plato1976]

There are two key issues here:

1. They will only be successful if the footprint is way smaller. But I don't see them shrink fast enough

2. I also love to see Eddie invest cash into business with higher IRR (better 50%+ :). but first Eddie needs to get cash, and at this time this retail chain is burning cash (pretty quickly)

I really love shld 's upside potential (if done right). But frankly I just don't see a confirmation so I can add more (much more)

 

Sears and its leadership is a bit more innovative than people give em credit. So far they've tried so many interesting and unique ideas and are so data-driven that eventually they'll find a way to make things work. Sears had a lot of catching up to do, technologically speaking. After a decade of upgrading their systems and how they manage inventory I think they'll be a lot more successful with a smaller footprint. But my real hope is he invests in other smaller retail concepts and buys other companies with excess cash.

[nkp007]

This is probably the most illuminating article I've read in the past few years on Sears. Including the link again:

 

http://www.businessweek.com/articles/2013-07-11/at-sears-eddie-lamperts-warring-divisions-model-adds-to-the-troubles#p1

 

It sounds like a circus. Does this scare the crap out of anyone else?

[Guest wellmont]

the irrepressible Eli Wexler.

 

http://www.businessinsider.com/sears-ceo-internal-facebook-2013-7

[txlaw]

This is probably the most illuminating article I've read in the past few years on Sears. Including the link again:

 

http://www.businessweek.com/articles/2013-07-11/at-sears-eddie-lamperts-warring-divisions-model-adds-to-the-troubles#p1

 

It sounds like a circus. Does this scare the crap out of anyone else?

 

We just had a short discussion about/sparked by this BW article.  Starting at http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/shld-sears/msg122936/#msg122936

 

I also think it was a very valuable article to read.

[txlaw]

My favorite part of the article was the email from the Sears guy:

 

“Clashes for resources are a product of competition and advocacy, things that were sorely lacking before and are lacking in socialist economies.”

 

I was laughing out loud at that one.

[Sportgamma]

Is the happiness of upper management really something that you want to be maximising?

 

http://live.wsj.com/video/charlie-ergen-isnt-mean/20F9D3F7-8109-4830-834A-FB37794EDFF5.html#!20F9D3F7-8109-4830-834A-FB37794EDFF5

 

 

[Myth465]

Sears is screwed as a retailer based on that article.

[PlanMaestro]

All large retailers are tough places to work for. Do you imagine being a merchant/trader being measured by daily results facing fickle customers and great competition? Have you spend a whole week on a shopping floor, much less a month or a year?

 

Retailers are businesses where personnel turnover of over 50% per year is the norm! No cushy cable companies here.

 

The point is that Sears went to an ideological extreme that screw up the stores, screw up customer service, and lost its top merchants.  Even with a housing starts break and lots of assets how can this  work long term?

 

So the question now is: Is Eddie Lampert only showing patience to maximize the RE recovery or has he developed an invincibility problem?

 

PS: txlaw's quote is by Chris Brathwaite VP of Corporate Communications a.k.a. the troll

[bargainman]

This reminds me of the divisional vs functional org discussion going on in the MSFT thread.  Clearly EL has gone for a highly divisional org.  The problem is that retail is in large part about low low margins and high efficiency.  Look at Amazon, Walmart, Costco.  Having a highly divisional org with overlapping responsibilities and functions and parts of the company at major odds makes for a high amount of inefficiency which is not good for retail.  He sounds like he's trying to start up a bunch of lean startups and be a tech guru a la Bezos..  But Bezos always starts with the customer and has ingrained that deeply into Amazon culture.  I don't see that in SHLD.  Bezos makes mention of the customer in shop your way, but it's definitely not deeply ingrained.  So again, it seems to me that EL is trying to be Bezos without necessarily having the techie chops, or the willingness to massively scale and go for low margins and high efficiency.  On the other hand he's certainly starting with more assets than Bezos had when he started amazon...

[txlaw]

PS: txlaw's quote is by Chris Brathwaite VP of Corporate Communications a.k.a. the troll

 

PlanMaestro?  More like PlanPinko.

 

Btw, Mr. "Maestro," you should read the Chairman's letters and ask yourself -- who is Eddie Lampert  (Answer: "We are!")

 

Thus Spake ESL.

[txlaw]

This reminds me of the divisional vs functional org discussion going on in the MSFT thread.  Clearly EL has gone for a highly divisional org.  The problem is that retail is in large part about low low margins and high efficiency.  Look at Amazon, Walmart, Costco.  Having a highly divisional org with overlapping responsibilities and functions and parts of the company at major odds makes for a high amount of inefficiency which is not good for retail.  He sounds like he's trying to start up a bunch of lean startups and be a tech guru a la Bezos..  But Bezos always starts with the customer and has ingrained that deeply into Amazon culture.  I don't see that in SHLD.  Bezos makes mention of the customer in shop your way, but it's definitely not deeply ingrained.  So again, it seems to me that EL is trying to be Bezos without necessarily having the techie chops, or the willingness to massively scale and go for low margins and high efficiency.  On the other hand he's certainly starting with more assets than Bezos had when he started amazon...

 

Yeah, what's funny is that Mr. Softee is reorganizing because they believe that more collaboration will make the whole worth more than the sum of the parts.

 

Here is that famous org chart drawing that MSFT is dealing with:

http://www.bonkersworld.net/images/2011.06.27_organizational_charts.png

 

And here's Ballmer's letter:

http://www.zdnet.com/ceo-ballmers-reorg-mail-to-the-troops-one-microsoft-all-the-time-7000017943/

[bobp]

the irrepressible Eli Wexler.

 

http://www.businessinsider.com/sears-ceo-internal-facebook-2013-7

 

Seems to me that if you want to mix with the common folk signing in as Eli, as in Eli Yale, might be a bad start. He couldn't have picked Bob or Joe?

[Guest wellmont]

the irrepressible Eli Wexler.

 

http://www.businessinsider.com/sears-ceo-internal-facebook-2013-7

 

Seems to me that if you want to mix with the common folk signing in as Eli, as in Eli Yale, might be a bad start. He couldn't have picked Bob or Joe?

 

probably some veiled Ann Rand reference.  ::)

[texual]

I'm not so worried about the decentralized nature of Sears, what upsets me is how this was created several years ago and yet, to my astonishment he hasn't been able to jettison or hammer out the underperformers to my knowledge.

 

In ESL's response to the interview, he said having this kind of organization makes him get a granular, P&L level view of the company in many divisions. He said it allows him to make better decisions for the company overall. What would be an example that he could have illustrated where he can show us the benefits of such an arrangement? Maybe he could point out that he spun off Orchard and SHOS. But that could have been done under the older structure too, no? I'd like to hear some rationale or perhaps a real life example where he met a challenge within a division and solved it and saw improvements. I doubt any single division has been prospering.

 

All that data he espouses didn't benefit Sears. Granted he is stingy as hell, and that may also be a 'strategy' in itself, to stem losses by preventing any overzealous manager from spending cash on failure (JCP/Ron Johnson), it seems with all the time he had, those divisions are still sucking wind.

 

My question to ESL would be how come the company really doesn't appear healthy to customers and to outsiders when there was a new organizational structure put in place to make it healthier? Perhaps the argument could be made that this is all intentional on his part. Split the company into parts, have them all fight and scramble for fewer dollars and the whole company appears sick and tired. Accumulate shares, piss off Wall street, and get ownership to the level where he can create value. I wouldn't be surprised. As much as it looks like he spends hours a day talking to Sears' people and conferences, he may actually not give a hoot about Sears. He could just be nuts and pretending this company matters to him, who knows?

 

 

[texual]

http://krugman.blogs.nytimes.com/2013/07/16/john-galt-and-the-theory-of-the-firm/

 

Great. Another armchair economist pretends he knows how to do stuff right. Because hes a multibillionaire and runs a company as big as SHLD.... zzzz

[enoch01]

http://krugman.blogs.nytimes.com/2013/07/16/john-galt-and-the-theory-of-the-firm/

 

Great. Another armchair economist pretends he knows how to do stuff right. Because hes a multibillionaire and runs a company as big as SHLD.... zzzz

 

Careful.  Just because Krugman is probably out of his depth doesn't mean Lampert is not.  I think Lampert thought Sears would be in a better position today based on this uber-granularity instituted a few years ago.  I'm not very conspiratorial about this.  He is in a tough spot, he had a big hand in it, and now he has to dig himself out.  I think some of this granularity will help him decide what to save. 

 

Meanwhile, the assets sit there.

[Guest wellmont]

the problem is nobody believes a word he says. nobody on wall street. main street. anywhere. He talks a good game---like he could teach at Harvard business school, with all his jargon, and experimental practices. the exception here is that there are still a few hard core loyalists who are convinced he's the second coming.  ;D

 

signed a shareholder

[texual]

Haha much appreciated Wellmont. I agree that I own shares based on a slightly less than rigorous analysis... ie - my investment is in the jockey and mostly the horses meat. We don't need to win races we just need to have enough meat to keep things interesting. Mostly though I think the customer base for Sears will be the last to recover to the point where buying appliances and hard good becomes a reality. While other retailers can improve earlier for the slightly more affluent, stores like Sears are stuck in the middle.

 

ESL presided over a company not able to withstand the forces against it, but you have to admit he may have kept it alive longer than any of his predecessors could have. In truth he didn't anticipate the economy to go that badly especially since he invested in Citigroup prior to the crash. His exuberance at that time may have also contributed to his enthusiasm to buy stock. Perhaps he anticipated that after a panic the market would just chug along like it is now. Maybe Dow 15,000 was in his mind during 2007 going into the next few years. The damage was so great he now is forced to sell assets he would prefer not selling.

 

Makes you wonder though how he can save himself when the walls are slowly creeping in.

[Guest wellmont]

when I said signed "a shareholder" I was referring to me. :(  we're in the same boat. We may just have different opinions about the Captain right now (subject to change).

[Parsad]

when I said signed "a shareholder" I was referring to me. :(  we're in the same boat. We may just have different opinions about the Captain right now (subject to change).

 

The Captain is not the problem, but the fact that he's trying to save everyone from a sinking ship, instead of the most people he CAN actually save.  And that is costing him lives!

 

Let's see if this is truly a more rapid process of monetizing the real estate assets.  If so, I think SHLD long-term shareholder's may finally be out of the hell they have been living.  If it's another false start, then maybe the Captain needs a kick up his arse!  Cheers! 

[texual]

Well it may not be as simple as that.

 

Saying he should sell off assets seems okay right now. But what if in two or three years when everything looks great in the economy, Sears will be left with less assets to capitalize on. Remember ESL said he had to do things he would prefer not to do. That means selling assets is a last minute effort to shore up cash. He would rather not sell stores or abandon employees knowing in some future date, those same assets are worth more and contribute to the overall economics of SHLD. So what I see right now among shareholders is a mad dash to some imaginary finish line where ESL sells off real estate, and brands etc. I highly doubt he would liquidate his company at any rate faster than he is now. It isn't in his best interest to shed assets right now. I believe the economy will be improved soon and appliance sales will rise.