SHLDQ - Sears Holdings Corp

[Luke 532]

Haven't been posting them as they have been numerous, but it seems like a few of these are opening every week: http://www.bellinghamherald.com/2013/11/05/3297122/sears-hometown-store-planning.html

[Mephistopheles]

Haven't been posting them as they have been numerous, but it seems like a few of these are opening every week: http://www.bellinghamherald.com/2013/11/05/3297122/sears-hometown-store-planning.html

 

I wonder if part of the strategy for SHLD includes selling or leasing stores to SHOS.

[Luke 532]

Haven't been posting them as they have been numerous, but it seems like a few of these are opening every week: http://www.bellinghamherald.com/2013/11/05/3297122/sears-hometown-store-planning.html

 

I wonder if part of the strategy for SHLD includes selling or leasing stores to SHOS.

 

Could be.  As somebody else mentioned previously, they might also be able to lease stores to Lands' End when/if they spin it off.

[Luke 532]

I find the highlighted section (my emphasis added) to be interesting.  Becomes CEO of Sears Holdings earlier this year and now this...

 

 

http://www.edmontonjournal.com/business/commercial-real-estate/Could+Sears+Canada+real+estate+cash/9132405/story.html

 

The promotion of COO Douglas Campbell to Sears Canada’s chief executive in the wake of Calvin McDonald’s exit signals that Sears Holdings, “and more likely Mr. Lampert, has, for better or worse, taken over operations of the company,” he added, noting Mr. Campbell’s experience as a consultant suggests the company will likely continue cutting costs and selling properties.

[Luke 532]

I find the highlighted section (my emphasis added) to be interesting.  Becomes CEO of Sears Holdings earlier this year and now this...

 

 

http://www.edmontonjournal.com/business/commercial-real-estate/Could+Sears+Canada+real+estate+cash/9132405/story.html

 

The promotion of COO Douglas Campbell to Sears Canada’s chief executive in the wake of Calvin McDonald’s exit signals that Sears Holdings, “and more likely Mr. Lampert, has, for better or worse, taken over operations of the company,” he added, noting Mr. Campbell’s experience as a consultant suggests the company will likely continue cutting costs and selling properties.

 

Sears Canada just sold 8 more properties for $300,000,000.

http://www.reuters.com/article/2013/11/11/searscanada-stores-idUSL4N0IW32720131111?source=email_rt_mc_body&app=n

[phil_Buffett]

is a Liquidation on sears Canada going on? i think they will sell all of the good properties and make a ton of cash. today another 300mio for 8 properties!

[Sunrider]

ok so another 23% of today's market cap :) for SCC.TO

[BTShine]

I read it as 50% interest in 8 locations sold for ~$300 million. That's a value of $600 million for a 100% interest in 8 stores.  Or am I missing something?

[phil_Buffett]

I read it as 50% interest in 8 locations sold for ~$300 million. That's a value of $600 million for a 100% interest in 8 stores.  Or am I missing something?

 

i read that too in the reuters article

 

edit: but i read in the global and mail that they only have a 50% Joint venture ownership in the stores they sold

 

http://www.theglobeandmail.com/report-on-business/sears-canada-sells-stake-in-8-properties-for-315-million/article15372709/

[Luke 532]

2016 options are now available as of today.

[BTShine]

Right, I did a poor job of writing.

 

Even though they are only seeing $300 million of cash proceeds, this deal shows the huge value in some of their real estate.  8 locations valued at $600 million is significant value.  That's $75 million per location.  Clearly Eaton Center and Al Moana are not the only locations worth a lot of money ($50 million+).

[Kraven]

I am a little concerned that this isn't a great deal.  See this article - "Sears Canada Swaps Properties for Loonies" (http://wallstcheatsheet.com/stocks/sears-canada-swaps-properties-for-loonies.html/?ref=YF).  Looks like Sears gave up some good real estate and all they got back were some crazy people.

[BTShine]

I'm not sure why you're concerned...?

 

How did they get crazy people back?

 

Looks like they sold for good money.

[heth247]

I am a little concerned that this isn't a great deal.  See this article - "Sears Canada Swaps Properties for Loonies" (http://wallstcheatsheet.com/stocks/sears-canada-swaps-properties-for-loonies.html/?ref=YF).  Looks like Sears gave up some good real estate and all they got back were some crazy people.

 

The above article is just a partial copy-and-paste of the "Global-and-Mail" article link posted by BTShine earlier.  In addition, it got it wrong by stating "The properties were sold for 315MM". The 315MM is for the 50% interest of Sears Canada. Before the sale, the properties are owned by Sears and Westcliff, half-half. After the sale they are owned by Westcliff and Montez Income, half-half.

 

The negative comments made by the analyst Keith Howlett is about the profitability of Sears Canada as a whole, not about this deal. He did estimate about $280MM of after-tax proceeds to Sears.

 

It is hard to say if it is a good deal or bad. I guess it all depends on the ROA of those properties Sears is getting before the sale, which is only known by the insiders.

[Mephistopheles]

So they sold these properties, but Sears is still operating there as a retailer? So now instead of owning the properties they are leasing them? They should have shut down the stores as well. It seems like now instead of having the stores on the balance sheet, they have lease obligations, which doesn't sound too great.

[heth247]

So they sold these properties, but Sears is still operating there as a retailer? So now instead of owning the properties they are leasing them? They should have shut down the stores as well. It seems like now instead of having the stores on the balance sheet, they have lease obligations, which doesn't sound too great.

 

There is not enough information to the public to figure it out. Those properties are likely profitable so Sears do not have to shut them down immediately.

 

In before, since Westcliff is the property manager, likely Sears is paying a management fee to them (usually a percentage number of the property value). Now that fee should be eliminated. Also, we don't know if Sears still locks the lease for a number of years or not. Too many variables.

[FCharlie]

I read it as 50% interest in 8 locations sold for ~$300 million. That's a value of $600 million for a 100% interest in 8 stores.  Or am I missing something?

 

Not stores... These are some of the shopping centers that Sears Canada owns. Look in the Sears Canada annual report. They disclose the joint ventures in shopping centers in there.

[Parsad]

So they sold these properties, but Sears is still operating there as a retailer? So now instead of owning the properties they are leasing them? They should have shut down the stores as well. It seems like now instead of having the stores on the balance sheet, they have lease obligations, which doesn't sound too great.

 

Well, they may be profitable or potentially profitable stores, but the sheer value of the properties made sense to take the cash and run.  Cheers!

[merkhet]

Looks like short interest jumped again... from 13,083,437 to 13,998,611 between 10/15/2013 and 10/31/2013... days to cover up to 15.5 now -- http://www.nasdaq.com/symbol/shld/short-interest

 

It's interesting that 10/31/2013 is after the announcement of the Lands End spinoff...

[heth247]

 

An interesting read -

 

Why Internet shoppers will wreck Amazon.com

 

http://www.marketwatch.com/story/why-internet-shoppers-will-wreck-amazoncom-2013-11-11?siteid=YAHOOB

[fareastwarriors]

http://www.bloomberg.com/news/2013-11-12/new-kmart-rent-to-own-program-turns-300-tv-into-415-buy.html

 

New Kmart Rent-to-Own Program Turns $300 TV Into $415 Buy

[Luke 532]

Looks like short interest jumped again... from 13,083,437 to 13,998,611 between 10/15/2013 and 10/31/2013... days to cover up to 15.5 now -- http://www.nasdaq.com/symbol/shld/short-interest

 

It's interesting that 10/31/2013 is after the announcement of the Lands End spinoff...

 

Short interest (7/31): 14,089,819

Short interest (10/31): 13,998,611

Change: decrease < 1%

 

Share price (7/31): $45

Share price (10/31): $58

Change: increase > 28%

 

Coiled-spring, short-squeeze dynamics still a very strong possibility.

[wisdom]

http://www.bloomberg.com/news/2013-11-12/new-kmart-rent-to-own-program-turns-300-tv-into-415-buy.html

 

[merkhet]

Now this is interesting...

 

 

We have brought partners like 1-800-FLOWERS, VISA and Burger King into our ecosystem, and we have expanded our relationship with Lands’ End, and Sears Hometown and Outlet Stores (“SHO”). We treat each of them as separate businesses and we generate revenues by serving them as clients. Increasingly, we also work with the Business Units at Sears and Kmart through client relationships, and our financial statements will fully reflect this in 2013.

 

 

https://sjobs.brassring.com/TGWEbHost/jobdetails.aspx?partnerid=455&siteid=185&areq=197481br

 

If you combine this with the following...

 

 

Third, we seek to accelerate our transformation by becoming a more focused company that is easier to understand and to manage not just from the standpoint of our store portfolio but also from the standpoint of our portfolio of businesses.

 

 

http://searsholdings.mediaroom.com/index.php?s=16310&item=137238

 

Maybe we'll start to see a little more granularity in the Sears financial statements?

[BTShine]

Great info.

 

I'm not getting hopeful that they show more granularity in the 2013 financials...but, it's welcomed if the do.  Also, It would be surprising that they'd announce that (or accidentally announce that) in a job posting...but, crazier things have happened.