SHLDQ - Sears Holdings Corp

[wisdom]

I would add that you are looking at liquidation values. I believe SHLD is a going concern and that changes the values assigned to the assets.

 

Experts have been calling for SHLD being bankrupt for over 7 years. Yet they are still around:

- with over $35 B in sales

- billions of $s worth of buybacks

- billions contributed to the pension

- spending money on SYWR, metascale, etc.

- $8B in liquidity.

 

Does not sound like a company heading towards bankruptcy anytime soon. 

 

So what, if I sell some assets if offered a good price for them to fund new ideas like SYWR - it does not automatically imply anything.

 

SHLD may well look different in the future - but, are we coming to the right conclusion. The so called experts have been wrong for years.

[tombgrt]

Not that anybody cares, but at the current price of $44 here's the way I look at it.  I believe there's really no way Lampert won't extract at least $40 for shareholders even if everything blows up in his face (he can extract value via spinoffs, monetizing real estate, and all the stuff we've been discussing on this thread).  So, $4 of downside (yes, I'm well aware that the stock could trade below $40) vs. an upside we can't even calculate.  I know some disagree but I believe the fact that we can't quantify the max upside is a good thing.  I'm not saying I agree with any of the following valuations, but let's look at the risk/reward odds based on what you might think SHLD is worth.  The "At $XX" is the amount you think SHLD is worth.

 

At $60 it's 4:1 ratio in your favor ($16 upside vs $4 downside)

At $80 it's 9:1

At $100 it's 14:1

At $150 it's 26:1

...and so on.

 

Luke, if you're willing, I'm still interested in hearing how you arrive at $40/share in value to be extracted. "Really no way" is very bullish but I don't see how he can just start pulling everything out and leave SHLD as barely more than an empty shell (that would likely implode on itself quite fast!).

 

Almost a decade of getting nowhere and we not being able to calculate a potential upside at least requires us to be sure about the value that's currently present and extractable. I don't see how it can be that high "easily". No amount of Berkowitz' quotes is going to add much insights IMO. I'd invest a ton in SHLD if I knew that there was significant movement for the better and/or improvement. That's just not clear now. Wouldn't even mind paying a 50% premium on today's price to get a REAL idea of where this thing will be in 3-5 years. We are completely in the dark and a lot of posts are just hopes and dreams of what might be.

[merkhet]

The "worst case scenario" concept was not from me, so I can't give you any specifics. Given all the uncertainties with Sears Holdings, I don't think I can identify a so called "floor" for intrinsic value. Luke's comment was "I believe there's really no way Lampert won't extract at least $40 for shareholders even if everything blows up in his face (he can extract value via spinoffs, monetizing real estate, and all the stuff we've been discussing on this thread)." All I did was ask him how he arrived at $40, that's all.

 

Okay, let me take a different approach then. Since you said the following:

 

I agree with you on Sears Canada's intrinsic value (I'm long it), but if we are assuming a "worst case" scenario I cannot assume it will go up to that level from here, which is why I used the current market value (which in said scenario could actually be too high).

 

I am assuming that you (A) have an intrinsic value in mind for Sears and (B) that intrinsic value is currently higher than the current market price and that is why you are long Sears Canada.  Are you willing to share your estimate of intrinsic value?

 

Additionally, I am assuming that when you say that "the current market value" "could be too high" at some point in the future, you have in mind some scenario(s) under which the intrinsic value of Sears Canada will be lower than the current market value. Would you be willing to share the types of scenarios under which that will occur?

 

I simply assume that if your sales are declining on an absolute basis then you are losing market share (very few markets are contracting on the whole).

 

Some things I agree with Baker Street (or anyone else) more or less on. That's what makes a market!

 

So the answer to my question about data is... no?

 

But there may be a difference between actual value and one's personal estimate of that value. There is no guarantee they will be approximately the same, as I'm sure we have all experienced many times over the years.

What you said above here...

 

Unless the company implements a dividend payout ratio of 100%, there is no assurance the true value will ever be realized by the investor. That is the danger, and why price cannot be ignored.

... is not the same as what you said above here...

[merkhet]

Luke, if you're willing, I'm still interested in hearing how you arrive at $40/share in value to be extracted. "Really no way" is very bullish but I don't see how he can just start pulling everything out and leave SHLD as barely more than an empty shell (that would likely implode on itself quite fast!).

Almost a decade of getting nowhere and we not being able to calculate a potential upside at least requires us to be sure about the value that's currently present and extractable. I don't see how it can be that high "easily". No amount of Berkowitz' quotes is going to add much insights IMO. I'd invest a ton in SHLD if I knew that there was significant movement for the better and/or improvement. That's just not clear now. Wouldn't even mind paying a 50% premium on today's price to get a REAL idea of where this thing will be in 3-5 years. We are completely in the dark and a lot of posts are just hopes and dreams of what might be.

 

I thought Chad and I just spent an afternoon going back and forth on that... we covered both valuation and fraudulent conveyance issues.... or is it that you want to hear Luke's valuations?

[merkhet]

Also, just to shift gears a little bit... didn't the Fed announce that it's tapering today? That should help the pension a little bit.

[spin]

Any views on a scenario where Eddie loads a HY debt structure (say 4-5x EBITDA, 3-4x Interest coverage) on the LE spin and dividends 400-500MM back to SHLD?

 

Offsets 4-5 years of EBITDA lost from LE spin and then used to solve the last sulg of 2014 pension funding.

 

Aggressive use of CF to then pay-down LE debt.  Assumes EBITDA has troughed.

 

"In connection with the spin-off, we may incur material indebtedness. Any such indebtedness would be described in an amendment to this information statement."

 

Spin

[peridotcapital]

 

Okay, let me take a different approach then. Since you said the following:

 

I agree with you on Sears Canada's intrinsic value (I'm long it), but if we are assuming a "worst case" scenario I cannot assume it will go up to that level from here, which is why I used the current market value (which in said scenario could actually be too high).

 

I am assuming that you (A) have an intrinsic value in mind for Sears and (B) that intrinsic value is currently higher than the current market price and that is why you are long Sears Canada.  Are you willing to share your estimate of intrinsic value?

 

Additionally, I am assuming that when you say that "the current market value" "could be too high" at some point in the future, you have in mind some scenario(s) under which the intrinsic value of Sears Canada will be lower than the current market value. Would you be willing to share the types of scenarios under which that will occur?

 

Sure. I bought Sears Canada earlier this year at $11.75. I thought at that time (and still think) that fair value is somewhere in the $20-$25 range (wide range, yes, but this is Sears after all -- harder to pin down than many securities). So after the $5 special dividend we would be looking at $15-20 vs $12 today.

 

Have I mapped out exact scenarios whereby it might only be worth $12? Or $6? Not to that extent, but it's not hard to get a general sense. My biggest worry with SHLD is that the retail losses never cease, and they negate the monetization of other assets, thereby capping future free cash flow and intrinsic value for the equity. Sears Canada is mildly profitable currently, so the biggest risk in my mind is that the retail situation gets worse, turns red, and negates future lease sales and/or property development at the few sites they do own, etc.

 

I simply assume that if your sales are declining on an absolute basis then you are losing market share (very few markets are contracting on the whole).

 

Some things I agree with Baker Street (or anyone else) more or less on. That's what makes a market!

 

So the answer to my question about data is... no?

 

If you want exact market share data, no I cannot provide that. I trust the articles I read that say Kenmore is now #3 based on industry research, but I have not purchased that research. For me, the fact that SHLD's appliance sales are going down (and the U.S. appliance market is not shrinking) is enough evidence for me that they are losing share.

 

But there may be a difference between actual value and one's personal estimate of that value. There is no guarantee they will be approximately the same, as I'm sure we have all experienced many times over the years.

What you said above here...

 

Unless the company implements a dividend payout ratio of 100%, there is no assurance the true value will ever be realized by the investor. That is the danger, and why price cannot be ignored.

... is not the same as what you said above here...

 

Fair enough. Perhaps one sentence did not convey well what I meant to say. I don't believe true value is ever knowable (if you use the PV of future free cash flow definition) by any investor because future free cash flow by definition is uncertain. So, yes, price and value could very well meet at various points in time, but no bell goes off. We never know for sure when those times are.

 

What I was trying to say was that we could never know if our own personal estimate of value is right, and be assured we will realize that value, unless we are literally receiving 100% of free cash flow as dividends. In the absence of that, we are estimating value and we bet that the consensus view (judged by the market price) will approximately agree with that estimate at some point during our holding period, so we can sell. And that can occur without actual value ever being realized, since it's all about what people think something is worth (relative to what we think), not necessarily what it actually is worth.

[peridotcapital]

Any views on a scenario where Eddie loads a HY debt structure (say 4-5x EBITDA, 3-4x Interest coverage) on the LE spin and dividends 400-500MM back to SHLD?

 

Offsets 4-5 years of EBITDA lost from LE spin and then used to solve the last sulg of 2014 pension funding.

 

Aggressive use of CF to then pay-down LE debt.  Assumes EBITDA has troughed.

 

"In connection with the spin-off, we may incur material indebtedness. Any such indebtedness would be described in an amendment to this information statement."

 

Spin

 

He wouldn't have much to lose unless he wants to hold on to his LE shares long term. Given that he is shedding the businesses that make money, and SHLD's cash flow situation in '14/'15 is not looking great, he should extract as much cash as he can from LE now. He's running out of places to do so (on his own timeline anyway, lease/store sales are not completely in his control). I'd be surprised if he dividends more than $200M-300M.

[merkhet]

Sure. I bought Sears Canada earlier this year at $11.75. I thought at that time (and still think) that fair value is somewhere in the $20-$25 range (wide range, yes, but this is Sears after all -- harder to pin down than many securities). So after the $5 special dividend we would be looking at $15-20 vs $12 today.

 

Have I mapped out exact scenarios whereby it might only be worth $12? Or $6? Not to that extent, but it's not hard to get a general sense. My biggest worry with SHLD is that the retail losses never cease, and they negate the monetization of other assets, thereby capping future free cash flow and intrinsic value for the equity. Sears Canada is mildly profitable currently, so the biggest risk in my mind is that the retail situation gets worse, turns red, and negates future lease sales and/or property development at the few sites they do own, etc.

 

I figured that was probably the worry, but I didn't want to put words in your mouth. I suppose your guess is as good as mine whether the capital allocation of the monetizations will be good or bad. Personally, I think that Eddie Lampert is done messing around based on the various moves he's made over the last eighteen months (Seritage, closing down 300+ stores, etc.)

 

Any views on a scenario where Eddie loads a HY debt structure (say 4-5x EBITDA, 3-4x Interest coverage) on the LE spin and dividends 400-500MM back to SHLD?

 

Offsets 4-5 years of EBITDA lost from LE spin and then used to solve the last sulg of 2014 pension funding.

 

Aggressive use of CF to then pay-down LE debt.  Assumes EBITDA has troughed.

 

"In connection with the spin-off, we may incur material indebtedness. Any such indebtedness would be described in an amendment to this information statement."

 

Spin

 

He wouldn't have much to lose unless he wants to hold on to his LE shares long term. Given that he is shedding the businesses that make money, and SHLD's cash flow situation in '14/'15 is not looking great, he should extract as much cash as he can from LE now. He's running out of places to do so (on his own timeline anyway, lease/store sales are not completely in his control). I'd be surprised if he dividends more than $200M-300M.

 

I wouldn't be surprised. He did something similar with SHOS a year ago.

[thepupil]

Berkowitz buddy added to board

 

Mr. Alvarez also serves on the board of directors of Fairholme Funds, Inc.; Intrexon Corporation; Mednax, Inc.; St. Joe Co.; and Watsco, Inc.

 

http://www.marketwatch.com/story/sears-holdings-elects-cesar-l-alvarez-to-board-2013-12-18?reflink=MW_news_stmp

[Matson125]

More AutoNation sales

 

http://www.sec.gov/Archives/edgar/data/350698/000119312513477844/d646901dsc13da.htm

 

As an AutoNation shareholder, I hope they are repurchasing most of his shares! LoL

[heth247]

I figured that was probably the worry, but I didn't want to put words in your mouth. I suppose your guess is as good as mine whether the capital allocation of the monetizations will be good or bad. Personally, I think that Eddie Lampert is done messing around based on the various moves he's made over the last eighteen months (Seritage, closing down 300+ stores, etc.)

 

Done? Why? I thought it is just the beginning... I would expect him to close/sell more stores when SYW pick up full steam and the sales are less dependent on the physical stores, so as to reduce SGA significantly to more than offset the sales decline and ultimately make the retail profitable. 

 

[merkhet]

I figured that was probably the worry, but I didn't want to put words in your mouth. I suppose your guess is as good as mine whether the capital allocation of the monetizations will be good or bad. Personally, I think that Eddie Lampert is done messing around based on the various moves he's made over the last eighteen months (Seritage, closing down 300+ stores, etc.)

 

Done? Why? I thought it is just the beginning... I would expect him to close/sell more stores when SYW pick up full steam and the sales are less dependent on the physical stores, so as to reduce SGA significantly to more than offset the sales decline and ultimately make the retail profitable. 

 

You and I are on the same page. When I said done messing around, I mean that he is accelerating his transformation.

[wisdom]

http://www.cnbc.com/id/101280028

 

former SCC CEO - talking about potentially 10% of malls closing by 2022 and retail moving to the internet.

[ASTA]

Well I sold 2% in apple and bought 2% in Shld yesterday of my overall portfolio but this time I am going to sell some at 65 :D

[Luke 532]

As a former senior accountant, I understand the following is generic… the lack of detail is against my nature, but it paints a picture (in my opinion) of how $40 is a floor on the value of the company.  And when I say “worst case” don’t hang on my every word (my wife is the accomplished author and word person in the family, I know my limitations and try to stick to math… by the way, Eric, when you have a wife like mine there’s no need to go to that bar you were talking about earlier  ;)).  My “worst case” doesn’t include SHLD being a distressed seller.  So perhaps this is more of a “worst realistic case” analysis.  Realistically speaking, I just don’t see how SHLD gets into a distressed seller situation… I’ll explain that a bit later in this post.

 

Taking all assets and liabilities at face value we have $2.327B in equity.  To get to $40/share that equity needs to be $4.240B, so we need to “find” $1.913B.  One way to get there is to find it via real estate.  We have $5.682B on the balance sheet for P&E.  Add $1.913B to $5.682B and if we can get a $7.595B that gets us to $40/share.

 

Here’s how I get to $7.595B+

 

90M sq ft owned at $65/sq ft* sale price = $5.850B

150M sq ft leased at $12/sq ft** lease price = $1.800B

Total = $7.650B

*Cleveland sale prices ~$65, nat’l avg ~$100. Keep in mind the JCP liquidation analysis showed $55 for “going dark” and $86 for “lit”... my calculations take the conservative approach of assuming all good properties are slightly more valuable than “going dark.”  In reality, they are keeping some locations, redeveloping others, etc.  And using near “going dark” valuations seems a bit ludicrous given the comments from Mathrani, Sokolov, Henry, and Lebovitz on pages 28-32 of Baker Street’s presentation.

**Cleveland lease prices ~$12, nat’l avg ~$15.

 

Again, this is a highly simplistic valuation, but that can oftentimes be the most useful when there are so many moving parts.  At $40/share the market is saying that SHLD’s entire portfolio is worth Cleveland real estate prices… I find that hard to believe (no offense to anyone living in or from Cleveland… Indians had a great season, by the way!).

 

To compensate for the time it might take to monetize or any impairment to brands/inventory/pension increasing, I’m using Cleveland rates which represent a steep discount to national averages.  I don’t think they will be a distressed seller given their liquidity position… that’s key to my assumptions.  Perhaps this isn’t truly a “worst case” as anything can happen with a distressed seller, but given their liquidity position, coupled with a capital allocator of Lampert’s ability, I just see a distressed situation as highly remote.  The major factor is the cash burn.  I believe the conservative valuation (Cleveland prices vs. what is likely reality) compensates for any cash burn that might be experienced.  That’s the quick summary of why I’m comfortable with a $40 floor.

 

Other factors:

Pension liability – assume it stays constant, but I imagine it will drop as rising interest rates are more likely than not.

Inventory – assume it is fairly valued on the books based on D’Ambrosio’s comments from a past conference call (I think Feb 2012?).  This is assuming they won’t become a distressed seller.

Brands – take at face value.  They could be worth more or less.  Again, assumes they won’t be forced to sell.

 

Feel free to tear this to shreds.  :)

[Luke 532]

Berkowitz buddy added to board

 

Mr. Alvarez also serves on the board of directors of Fairholme Funds, Inc.; Intrexon Corporation; Mednax, Inc.; St. Joe Co.; and Watsco, Inc.

 

http://www.marketwatch.com/story/sears-holdings-elects-cesar-l-alvarez-to-board-2013-12-18?reflink=MW_news_stmp

 

Not that it matters, but Alvarez lives in South Florida, as do Lampert and Berkowitz.

[peridotcapital]

Taking all assets and liabilities at face value we have $2.327B in equity.  To get to $40/share that equity needs to be $4.240B, so we need to “find” $1.913B.  One way to get there is to find it via real estate.  We have $5.682B on the balance sheet for P&E.  Add $1.913B to $5.682B and if we can get a $7.595B that gets us to $40/share.

 

Curious if the huge amount of goodwill/intangibles on the balance sheet gives you any pause. Given your accounting background, I am guessing you would say that if they have not impaired it yet, then you feel comfortable with the number on the balance sheet. While shareholders equity is $2.3B, the intangible assets total over $3.2B, so tangible equity is negative to the tune of almost $1.0B. Pretty large number. Any concerns with this?

 

[Luke 532]

Taking all assets and liabilities at face value we have $2.327B in equity.  To get to $40/share that equity needs to be $4.240B, so we need to “find” $1.913B.  One way to get there is to find it via real estate.  We have $5.682B on the balance sheet for P&E.  Add $1.913B to $5.682B and if we can get a $7.595B that gets us to $40/share.

 

Curious if the huge amount of goodwill/intangibles on the balance sheet gives you any pause. Given your accounting background, I am guessing you would say that if they have not impaired it yet, then you feel comfortable with the number on the balance sheet. While shareholders equity is $2.3B, the intangible assets total over $3.2B, so tangible equity is negative to the tune of almost $1.0B. Pretty large number. Any concerns with this?

 

I've always been more of a fan of tangible assets over intangible assets.  I like stuff I can put my hands on.  With that said, I don't think the $3.237B in intangibles is that far off the mark.  Although brand value will get hit with declining sales in Sears retail, it would maintain (maybe increase) it's value with the success of sales at SHOS.  Perhaps that's one reason why Lampert is moving slowly... to preserve the value of the brands.  What are your thoughts on it?

[peridotcapital]

Taking all assets and liabilities at face value we have $2.327B in equity.  To get to $40/share that equity needs to be $4.240B, so we need to “find” $1.913B.  One way to get there is to find it via real estate.  We have $5.682B on the balance sheet for P&E.  Add $1.913B to $5.682B and if we can get a $7.595B that gets us to $40/share.

 

Curious if the huge amount of goodwill/intangibles on the balance sheet gives you any pause. Given your accounting background, I am guessing you would say that if they have not impaired it yet, then you feel comfortable with the number on the balance sheet. While shareholders equity is $2.3B, the intangible assets total over $3.2B, so tangible equity is negative to the tune of almost $1.0B. Pretty large number. Any concerns with this?

 

I've always been more of a fan of tangible assets over intangible assets.  I like stuff I can put my hands on.  With that said, I don't think the $3.237B in intangibles is that far off the mark.  Although brand value will get hit with declining sales in Sears retail, it would maintain (maybe increase) it's value with the success of sales at SHOS.  Perhaps that's one reason why Lampert is moving slowly... to preserve the value of the brands.  What are your thoughts on it?

 

I typically value intangibles at zero as one of the various ways to build in a cushion for myself. In the case of Sears and their ownership of KCD (I am especially keen on Craftsman -- Kenmore and Diehard not so much), that would make little sense so I cannot simply ignore it. Fortunately, SHLD actually discloses the net book value of the KCD IP ($1.0B). So for me, the remaining $2.2B is the concerning part. 

 

 

[constructive]

Fortunately, SHLD actually discloses the net book value of the KCD IP ($1.0B). So for me, the remaining $2.2B is the concerning part.

 

You need to add KCD debt (held by Sears Re) and equity in order to get KCD enterprise value. Which is pretty close to total intangibles.

 

If KCD wasn't separate and securitized, they probably would have needed to start writing it down already. Obviously it's worth something but I don't think it's conservative to mark it at full book value.

[finetrader]

I just recently looked at Sears Holdings 2012 annual report, and q3 2013,

 

And the FCF is not so bad. Ex:

 

For 2012, it's 303M$ used in operating activities but in this you have 593M$ for pension contribution.

If you consider this pension contribution as deleveraging, then the cash flow from operations is about +290. And purchase of property is 378M$, for a FCF of -88M$.

 

So the theory, that the longer you wait for Eddie to liquidate RE's portfolio the less value you will realize at the end because of operating losses realized during this time, might not be so valid.

 

In other words, Sears don't lose that much money in his operations so you can be patient and wait for Eddie to realize that RE value.

 

We'll have to see what 2013 results looks like as q4 is the most important one

 

[BTShine]

Looking at the Lands' End filing.  It shows that LE square footage within Sears will shrink by 5% "on or prior to the distribution date as a result of real estate reallocation within Sears Holdings". Note it said 'within Sears Holdings', not just Sears.

 

Isn't this saying Sears Holdings will be reallocating their real estate (RE closures, sales, etc.).  These reallocations are expected to affect 5% of the Sears locations with a Lands' End?

 

I'm thinking SHLD will close 5% of their Sears and Kmart locations.  Basically, after the holidays I expect we see an announcement for closings of another 100

stores.

[peridotcapital]

Looking at the Lands' End filing.  It shows that LE square footage within Sears will shrink by 5% "on or prior to the distribution date as a result of real estate reallocation within Sears Holdings". Note it said 'within Sears Holdings', not just Sears.

 

Isn't this saying Sears Holdings will be reallocating their real estate (RE closures, sales, etc.).  These reallocations are expected to affect 5% of the Sears locations with a Lands' End?

 

I'm thinking SHLD will close 5% of their Sears and Kmart locations.  Basically, after the holidays I expect we see an announcement for closings of another 100

stores.

 

Remember that LE only sells their clothing in ~275 Sears stores. So if 5% of those were to close you are looking at about a dozen stores. I would guess that this number includes stores that Sears has already decided to close, but were still open at the time of the filing (and are set to close over the next one or two quarters). Of course, more store closing decisions are likely in 2014 (they seem to be averaging a dozen or two every quarter), but I doubt they would telegraph them ahead of time in LE filings (other than a standard general disclosure that future closing are possible).

 

Interestingly, I had simply assumed that LE did not pay rent to Sears for their floor space space while they owned them. But it turns out they do, to the tune of $35M per year. Bummer for those who had hoped this spin off would boost Sears's sublease income. And it also sheds light on their sublease income breakdown (it was $50M in total last year, so $15M of that was from tenants other than LE -- a good number to watch in future 10-K filings).

[krazeenyc]

Looking at the Lands' End filing.  It shows that LE square footage within Sears will shrink by 5% "on or prior to the distribution date as a result of real estate reallocation within Sears Holdings". Note it said 'within Sears Holdings', not just Sears.

 

Isn't this saying Sears Holdings will be reallocating their real estate (RE closures, sales, etc.).  These reallocations are expected to affect 5% of the Sears locations with a Lands' End?

 

I'm thinking SHLD will close 5% of their Sears and Kmart locations.  Basically, after the holidays I expect we see an announcement for closings of another 100

stores.

 

Could be a bunch of different things. I wouldn't read too much into it. There are a bunch of stores already slated to close that haven't yet. Also Lands End within Sears locations is a pretty horrible business -- they could be actually closing some Lands End locations in Sears locations specifically who knows. Remember only 270 or so LE locations so 5% is like 13-15 stores? These could be easily part of already announced closings.

 

Looking at the Lands' End filing.  It shows that LE square footage within Sears will shrink by 5% "on or prior to the distribution date as a result of real estate reallocation within Sears Holdings". Note it said 'within Sears Holdings', not just Sears.

 

Isn't this saying Sears Holdings will be reallocating their real estate (RE closures, sales, etc.).  These reallocations are expected to affect 5% of the Sears locations with a Lands' End?

 

I'm thinking SHLD will close 5% of their Sears and Kmart locations.  Basically, after the holidays I expect we see an announcement for closings of another 100

stores.

 

Remember that LE only sells their clothing in ~275 Sears stores. So if 5% of those were to close you are looking at about a dozen stores. I would guess that this number includes stores that Sears has already decided to close, but were still open at the time of the filing (and are set to close over the next one or two quarters). Of course, more store closing decisions are likely in 2014 (they seem to be averaging a dozen or two every quarter), but I doubt they would telegraph them ahead of time in LE filings (other than a standard general disclosure that future closing are possible).

 

Interestingly, I had simply assumed that LE did not pay rent to Sears for their floor space space while they owned them. But it turns out they do, to the tune of $35M per year. Bummer for those who had hoped this spin off would boost Sears's sublease income. And it also sheds light on their sublease income breakdown (it was $50M in total last year, so $15M of that was from tenants other than LE -- a good number to watch in future 10-K filings).

 

Peridot I don't think Sears books sublease money from wholly owned subsidiaries (like Lands End) on that sublease line.  I've been watching this line carefully - it stood at $50 mill for a bunch of years and then plummeted to 30 or so in 2011 and back up to 50 in 2012. (2012 there was a whole foods launched, a big gym near SF 70,000 sq ft and large grocery in San Diego among other deals). 

 

Remember Avis has a  partnership with Sears Autocenters there are 150+ Avis locations in Sears auto centers. (this maybe why a lot of seritage locations are auto centers -- more immediate income.)