SHLDQ - Sears Holdings Corp

[Mephistopheles]

E-commerce strategy slide deck

http://www.slideshare.net/ishmelev/digital-franchise-sears-2014-jan

 

I couldn't help but chuckle at this typo from the 2nd slide:

 

"Heavy operating costs make it expansive to expand the department store business."

[tombgrt]

So Shop Your Way is built in a way that is quite generic... you won't know it's from Sears. I wonder if this can potentially be a spin off asset down the road.

 

Also, it looks like the site is designed to scale, you can add more brands, stores, departments etc.. wonder if the longer term plan is to scale this out other companies and brands and carry more non-traditional products. Once you have the members and infrastructure, scaling up on revenue will turn to profit (OSTK like cycle)

 

You can also see their have built a social network features around the site.

 

But I check their facebook and twtr followers, number is dismal even when compare to Sears itself. Long way to go but just a thought as billions of dollar will be put in to build it.

 

Thoughts?

 

 

You might actually be right.  Eddie is crazy like a fox perhaps. 

 

On the one hand, he says SYW is working and keeps repeating the growth in members and how they're doing more shopping online.  He says this while same-store-sales are collapsing.  He also says they are pursuing an "asset light" strategy.  He is actually a fairly humble guy too.

 

 

I guess it's fairly obvious that if SYW succeeds, it is actually eating out of the revenues of the retail stores.  I mean, you can buy Craftsman now without setting foot in a store.

 

Suppose a person does actually set foot in a Sears store.  What do they do?  They try as hard as possible to get that person to sign up for SYW.  That only decreases the likelihood that they'll come back into the store again if they can fulfill their shopping for KCD products online.

 

So it's like he recognizes that he has to shut down all these big stores, but can't stand missing out on the chance to build a very valuable online retailer.  So he needs to keep the stores open long enough to strip them of their customers (converting them to SYW loyal members).

 

Then he can start closing stores once he's stripped them of customers for SYW.  That gives him cash as well as stems the store operating losses.

 

Now, if he succeeds in building up SYW large enough, he can then use a lot of his big-box retail stores as online fulfillment centers.  And he can scale it up to other brands that want to join his SYW network, so that people can return their online purchases to a physical location (instead of having to mail it back to Amazon, for example).

 

Plus he can use some of the space as showroom -- sometimes you want to try the jacket on before you buy it.  Or you want to physically see it.  But you only need a few demo items for this, so not much space.

 

So then like you said, SYW could be spun off once successful.

 

They have all the retail locations (that they can't sell) to make it a fabulous grand slam hit.  They need to grow their membership to make the SYW network more valuable, then they need to bring other brands online, and they need to have all the online fulfillment centers physical space (which they already have).  But in the meantime, they continue to operate Sears to strip it of customers and build up the SYW network.

 

Only it's really expensive as all startups are, and he has a lot of assets to fund it.  So this is his grand strategy and you are going to have to watch more burn in order to pull it off.  But it could be a hit.  He has been hiring all kinds of IT people to work on that website, so it might really be that he wants to take on Amazon -- or at least be a respectable competitor that makes money.

 

So he doesn't really need to liquidate all those stores -- some of them are essential as online fulfillment centers with a brick-and-mortar face that the customer can interact with.  Try on clothes, return items, etc...

 

Crazy?

 

Those have been my (partial) thoughts for a while as well. Redevelop part of the stores to fulfillment centers, increase SYW membership and activity while you lower store count, add brands, make the membership program attractive enough,... I don't really see any other way to end the death spiral. There are great benefits to being an online retailer with nationwide centers where you can check stuff out, return items, pick them up, ... in terms of customer service, overhead expenses, flexibility and so on.

 

The fact that he is looking to spin-off Lands' End and not something else, fits in that story. Clothes are by far the hardest thing to buy online and in reality it's probably impractical to test clothing in a 'fulfillment center'. It just doesn't fit for an online retailer, just look at the return rates on clothing versus other items for online retailers. Brand value likely isn't all that either. Maybe I got it wrong but it just seems the least compelling category. Lands' End could probably get further with smaller solo stores. He could keep it in SYW as well but I doubt it would be worth the trouble.

 

One has to wonder why Lampert is so hell-bent on making this work and why he so firmly believes that they had to be profitable already. Has he really gone crazy or does he has a chance to succeed? I'd say it's still very much a start up but but with a decent chance to succeed in the end. Question is how much RE/brand value he is going to burn through first and whether it is going to be worth it in the end.

 

I also wouldn't be surprised to see a much lower stock price from the current levels. This thing is going to bounce around for a while. BUT if SYW is a succes, suddenly it will be getting valued at multiples from today. If it gets a fraction of the valuation of AMZN, we could easily be talking a multibagger from current levels. That is of course assuming all works out which is far from certain at this point.

 

Anyway, I think you made some good points Eric. As always you hit the nail on the head with questions that matter.

[alertmeipp]

So Shop Your Way is built in a way that is quite generic... you won't know it's from Sears. I wonder if this can potentially be a spin off asset down the road.

 

Also, it looks like the site is designed to scale, you can add more brands, stores, departments etc.. wonder if the longer term plan is to scale this out other companies and brands and carry more non-traditional products. Once you have the members and infrastructure, scaling up on revenue will turn to profit (OSTK like cycle)

 

You can also see their have built a social network features around the site.

 

But I check their facebook and twtr followers, number is dismal even when compare to Sears itself. Long way to go but just a thought as billions of dollar will be put in to build it.

 

Thoughts?

 

 

You might actually be right.  Eddie is crazy like a fox perhaps. 

 

On the one hand, he says SYW is working and keeps repeating the growth in members and how they're doing more shopping online.  He says this while same-store-sales are collapsing.  He also says they are pursuing an "asset light" strategy.  He is actually a fairly humble guy too.

 

 

I guess it's fairly obvious that if SYW succeeds, it is actually eating out of the revenues of the retail stores.  I mean, you can buy Craftsman now without setting foot in a store.

 

Suppose a person does actually set foot in a Sears store.  What do they do?  They try as hard as possible to get that person to sign up for SYW.  That only decreases the likelihood that they'll come back into the store again if they can fulfill their shopping for KCD products online.

 

So it's like he recognizes that he has to shut down all these big stores, but can't stand missing out on the chance to build a very valuable online retailer.  So he needs to keep the stores open long enough to strip them of their customers (converting them to SYW loyal members).

 

Then he can start closing stores once he's stripped them of customers for SYW.  That gives him cash as well as stems the store operating losses.

 

Now, if he succeeds in building up SYW large enough, he can then use a lot of his big-box retail stores as online fulfillment centers.  And he can scale it up to other brands that want to join his SYW network, so that people can return their online purchases to a physical location (instead of having to mail it back to Amazon, for example).

 

Plus he can use some of the space as showroom -- sometimes you want to try the jacket on before you buy it.  Or you want to physically see it.  But you only need a few demo items for this, so not much space.

 

So then like you said, SYW could be spun off once successful.

 

They have all the retail locations (that they can't sell) to make it a fabulous grand slam hit.  They need to grow their membership to make the SYW network more valuable, then they need to bring other brands online, and they need to have all the online fulfillment centers physical space (which they already have).  But in the meantime, they continue to operate Sears to strip it of customers and build up the SYW network.

 

Only it's really expensive as all startups are, and he has a lot of assets to fund it.  So this is his grand strategy and you are going to have to watch more burn in order to pull it off.  But it could be a hit.  He has been hiring all kinds of IT people to work on that website, so it might really be that he wants to take on Amazon -- or at least be a respectable competitor that makes money.

 

So he doesn't really need to liquidate all those stores -- some of them are essential as online fulfillment centers with a brick-and-mortar face that the customer can interact with.  Try on clothes, return items, etc...

 

Crazy?

 

Those have been my (partial) thoughts for a while as well. Redevelop part of the stores to fulfillment centers, increase SYW membership and activity while you lower store count, add brands, make the membership program attractive enough,... I don't really see any other way to end the death spiral. There are great benefits to being an online retailer with nationwide centers where you can check stuff out, return items, pick them up, ... in terms of customer service, overhead expenses, flexibility and so on.

 

The fact that he is looking to spin-off Lands' End and not something else, fits in that story. Clothes are by far the hardest thing to buy online and in reality it's probably impractical to test clothing in a 'fulfillment center'. It just doesn't fit for an online retailer, just look at the return rates on clothing versus other items for online retailers. Brand value likely isn't all that either. Maybe I got it wrong but it just seems the least compelling category. Lands' End could probably get further with smaller solo stores. He could keep it in SYW as well but I doubt it would be worth the trouble.

 

One has to wonder why Lampert is so hell-bent on making this work and why he so firmly believes that they had to be profitable already. Has he really gone crazy or does he has a chance to succeed? I'd say it's still very much a start up but but with a decent chance to succeed in the end. Question is how much RE/brand value he is going to burn through first and whether it is going to be worth it in the end.

 

I also wouldn't be surprised to see a much lower stock price from the current levels. This thing is going to bounce around for a while. BUT if SYW is a succes, suddenly it will be getting valued at multiples from today. If it gets a fraction of the valuation of AMZN, we could easily be talking a multibagger from current levels. That is of course assuming all works out which is far from certain at this point.

 

Anyway, I think you made some good points Eric. As always you hit the nail on the head with questions that matter.

 

Btw, they have Sears.com already if they just want to have a web presence and as noted, they are getting okay sales from it and adding reward to Sears card member has been there for a long time.

 

Why spend any hundreds of millions on SYW and points? They call it a platform and it has way more than homedepot.com and the like, it has things like http://developer.shopyourway.com/display/platdev/Shop+Your+Way+Developers

 

Will it worth the money they put in? I don't know, but to view SYW as a simple web presence site or loyalty program may under-estimate why this crazy man is trying to do IMO.

 

 

[yadayada]

this thread is literally the size of a book. This board could print it and publish it. A book about sears.

[merkhet]

http://articles.chicagotribune.com/2013-11-24/business/ct-biz-1124-phil-lampert--20131124_1_sears-and-kmart-stores-edward-lampert

 

I think ESL lays a lot out in this interview with the Chicago Tribune (posted before)

 

"With $30 billion-plus in sales, we don't have a customer problem," Lampert said by phone after the company's latest subpar earnings report. "We don't have a sales problem. What we have is a profit problem, and that's what we're intending to address. … We need to demonstrate that if we serve people well, we can actually make an acceptable amount of money."

 

It doesn't seem like ESL is totally oblivious to the facts here.

 

"It doesn't make sense to have millions or tens of millions of dollars invested in a property that doesn't make money," he said. "What real estate affords us: It's a footprint to serve members, first. It also (gives) us the ability to afford a transformation and to be able to withstand, one, a financial crisis, which we went through, and two, withstand a period of poor operating performance, which hopefully will come to an end soon."

 

Lampert expected it to have come to an end already.

 

"The honest answer is we certainly had plans (for a turnaround) and forecasts for this year that it would have happened already, and we haven't delivered against that," Lampert said. "The Shop Your Way membership metrics that we measure, and there are many of them, almost uniformly they've been going in the right direction. Many have exceeded what our expectations were at the beginning of the year. So we see these behaviors that are foundational to the transformation and foundational to restoring profitability. But we haven't been able to connect those behaviors to the actual results."

 

It looks like he is willing to stick to the SYW spending, but it also doesn't seem like he's oblivious to the fact that SYW has not been delivering on the profits that he wants.

 

A few open questions:

 

(1) "We don't have a sales problem." Is that still true after Q4?

(2) Does he believe that if he just spends a bit more on SYW, it'll work? (i.e. the cure is just over the next mountaintop)

(3) When/How will he make a determination as to whether SYW is a success or failure?

(4) How much of the real estate monetization is going towards SYW and how much is not?

 

---

 

Also, this next comment is not directed towards yadayada -- it just happens that he mentioned the thread length -- but why do people seem unwilling to read long threads?  If you're not willing to read a thread that's "too long," I suspect that you will also have a pretty hard time reading a bunch of 10-Ks and 10-Qs to figure out what's going on at this company or any other company.  In which case maybe investing in individual securities is not your thing.  Spark Notes are dangerous in investing.

[stahleyp]

This is kind of frustrating. I know we've talked about the frustration of SYW but this is bad, too.

 

So, on Facebook, this morning they posted this:

 

"The only thing you’ll need to bring to the gym (besides yourself). http://shout.lt/pmBq"

 

It then links you to this:

 

http://www.sears.com/sportline-pocket-bottle/p-00614053000P?prdNo=3&blockNo=3&blockType=G3&sid=ISm21100224x004018

 

I was  thinking it's a bottle with a protein cup or something alone those lines. I look at the pictures...and, well, I don't know what that "pocket" is for. Random stuff?

 

I go to the description and it says:

 

"Pocket Bottle

Added on November 01, 2010"

 

No description of the pocket, no size....but hey, it's got the date on there!

 

I hop on amazon (it's more expensive on amazon)

 

http://www.amazon.com/Pocket-Bottle-Black/dp/B00BQ3W6R0

 

And, lo and behold, it has an actual description.

 

Integrated pocket stores small essentials such as money or ID

Sound-resistant pocket prevents contents from rattling

Easy to use flip-top

Bottle holds 28 oz / 825 ml

Built-in straw

 

 

 

 

[ERICOPOLY]

This is kind of frustrating. I know we've talked about the frustration of SYW but this is bad, too.

 

So, on Facebook, this morning they posted this:

 

"The only thing you’ll need to bring to the gym (besides yourself). http://shout.lt/pmBq"

 

It then links you to this:

 

http://www.sears.com/sportline-pocket-bottle/p-00614053000P?prdNo=3&blockNo=3&blockType=G3&sid=ISm21100224x004018

 

I was  thinking it's a bottle with a protein cup or something alone those lines. I look at the pictures...and, well, I don't know what that "pocket" is for. Random stuff?

 

I go to the description and it says:

 

"Pocket Bottle

Added on November 01, 2010"

 

No description of the pocket, no size....but hey, it's got the date on there!

 

I hop on amazon (it's more expensive on amazon)

 

http://www.amazon.com/Pocket-Bottle-Black/dp/B00BQ3W6R0

 

And, lo and behold, it has an actual description.

 

Integrated pocket stores small essentials such as money or ID

Sound-resistant pocket prevents contents from rattling

Easy to use flip-top

Bottle holds 28 oz / 825 ml

Built-in straw

 

 

Notice how it's not available for shipping?

 

This is a bribe to get you into a Sears store.  Unfortunately, the stores are ugly and about as devoid of character as that SYW listing that has no description and no comments.  So paying you money to get you into a Sears store -- it's not like you are going to come back after noticing that it's a store without personality.

 

Sort of like how the stores seem understaffed when you have a question, the SYW listing seems understaffed in that they didn't pay anyone to fill out a description.

[jouni1]

it also automatically shows me the price in euros. the problem is, information about shipping costs is impossible to find (included in item price or a separate cost?) even though it notices i'm in finland.

 

all the big ones tell me straight away how much is it going to cost to get the item down here. would pay 2eur more to use amazon interface.

[ERICOPOLY]

Still on that Pocket Bottle topic...

 

It says it is available from Sears for $18.48.

 

But then it says the regular price is $9.99.

 

Is this site a psycho split personality?  Why is Sears selling it for wayyyy higher than the "regular price".  Is Sears some place that massively overcharges people?  What kind of place is Sears, sounds like no place I want to go.  I don't want to pay a massive percentage above "regular price" for anything.

 

 

SYW is basically telling you that Sears massively overcharges above regular price -- so don't go there.

[ERICOPOLY]

So it's a bizarre thing.  The promotion seems intended to drive more foot traffic in a Sears store in order to pick up more sales (they decide to buy workout clothes at the same time).

 

However, the promotion is also educating you that things at Sears are REALLY EXPENSIVE.

 

Perhaps this is the "Warring Tribes" model.  The online tribe is screwing the mall store tribe.

 

[krazeenyc]

Still on that Pocket Bottle topic...

 

It says it is available from Sears for $18.48.

 

But then it says the regular price is $9.99.

 

Is this site a psycho split personality?  Why is Sears selling it for wayyyy higher than the "regular price".  Is Sears some place that massively overcharges people?  What kind of place is Sears, sounds like no place I want to go.  I don't want to pay a massive percentage above "regular price" for anything.

 

 

Sears is out of stock. The other price is $18.48 is a market place merchant -- this is the same as amazon when they go out of stock.  Sears' does not have the depth of 3rd party merchants that amazon.com has this phenomenon happens on amazon all the time as well.  Marketplace is the ultimate asset light model (Sears does about $700 million of marketplace sales per year).

 

SYW is basically telling you that Sears massively overcharges above regular price -- so don't go there.

[ERICOPOLY]

Still on that Pocket Bottle topic...

 

It says it is available from Sears for $18.48.

 

But then it says the regular price is $9.99.

 

Is this site a psycho split personality?  Why is Sears selling it for wayyyy higher than the "regular price".  Is Sears some place that massively overcharges people?  What kind of place is Sears, sounds like no place I want to go.  I don't want to pay a massive percentage above "regular price" for anything.

 

 

Sears is out of stock. The other price is $18.48 is a market place merchant -- this is the same as amazon when they go out of stock.  Sears' does not have the depth of 3rd party merchants that amazon.com has this phenomenon happens on amazon all the time as well.  Marketplace is the ultimate asset light model (Sears does about $700 million of marketplace sales per year).

 

SYW is basically telling you that Sears massively overcharges above regular price -- so don't go there.

 

 

I see your point.  However I didn't see it that way as a casual observer of the advertisement -- instead, I just read that page as telling me that Sears (as well as one other partner) would each offer it for nearly twice as much.

 

It's a different message from the "Low Prices Everyday" advertising that Walmart does.  Instead of seeing the Sears name associated with "low prices everyday", I see it associated with high prices.  So I start developing the association.

 

Somehow they should stop advertising to SYW members that Sears prices are really high. 

 

Amazon will tell you who the real seller is that is offering it at a high price -- so it's clearly not Amazon.  They just tell you it's "fulfilled by Amazon" and then tell you who the real seller is. 

 

Instead, SYW seems to say there are two other sellers with high prices... "sold by Sears and one seller partner".  Rather, they could instead say "sold by a trusted partner of Sears online marketplace".

 

Notice the wording?  Not just Sears alone, but also sold by one seller partner.  So they both sell it at high prices?  Or is it just the seller partner that is charging a ripoff price, but not also Sears?  Huh...    Why not just say it's available from "one seller partner" and leave the Sears name out of it -- it's bad to suggest to the customer that Sears is one of the sellers at such a high price, if it isn't that very seller.  The whole point of this offering is to get a customer into a Sears store to pick up the item -- don't seed him with high price expectations.

[ERICOPOLY]

Anyway, if I enter my location for that item is says that store pickup is unavailable within 50 miles of my location.

 

I entered a bunch of other city names and it all said the same thing.  I can't find it in any city.  Weird.  Maybe it was just targeted to Shop Your Way members who live within range of one particular store that wanted to reduce inventory for that item.

 

It's pretty funny -- if you type in "Sacramento" as your location, it will then say "Did you mean Sacramento, CA, or Sacramento, KY, or Sacramento, PA"

 

Huh?

 

That's really funny because they don't have any stores within 50 miles of Sacramento, KY or Sacramento, PA.  If you select those cities, it won't even give you an error message telling you of this.  It just acts like you didn't even make a request.

 

[krazeenyc]

If you click from Sears and 1 partner it shows the partner that is selling it. (the Sears site sux compared to amazon).  But both sears.com and Sears marketplace are both growing rapidly.

 

Sears retail is horrible -- I KNOW. But I want to post more on SHLD -- especially since I can pretty much debunk the myth that Sears Retail is so bad that the retail ops is burning all the cash/real estate -- IT IS NOT. But I suggest everyone look at Sears 2 years ago vs Sears now -- CASH/DEBT/PENSION vs PROPERTY/LEASES SOLD.  Realize that the SCC ownership is only 50% they recieved 300M USD from SCC in the last 2 years from SCC dividends. Consider Sears spent $1 billion in cash on the pension/postretirement benefits -- and the liablity went from $3 billion to about $1.4 billion. Look at how much CASH was burned, how much Debt was added, how much the pension was reduced, and how much SHLD took in from 1 offs (SHLD real estate transactions/SHOS and SCC dividends). Obviously the return on assets is HORRIBLE -- but the actual cash burn from retail ops is $0 or less depending on how you look at it.

 

What they're really doing is burning inventory -- liquidating in slow motion all the excess stores.

They are bridging the gap from a retailer with a lot of real estate  to real estate company with a retailer attached.

[BTShine]

On my iPhone it shows it's available from "Other Marketplace Sellers for $18.45."  Amazon will usually show other sellers with higher prices.  Not sure if it looks different on the computer.

[ERICOPOLY]

If you click from Sears and 1 partner it shows the partner that is selling it. (the Sears site sux compared to amazon).  But both sears.com and Sears marketplace are both growing rapidly.

 

 

I suspect they are having trouble with scalability of traffic to their site.  It would obviously be simpler to the user to NOT have to click on the link for such basic information, but it takes pressure off the database if they put as little information as possible onto the page.  That might be why the product also has no description -- however I may be getting too charitable here.

 

Remember last August when they had the same item multiple times in the database at different prices?  You would get an offer on the page, then when you put it in your cart they would change the price on you.  It was bait and switch.  But I think the problem there is they tried to do static page caching in order to improve site performance (take pressure off the database).

 

So they seem to be dealing with growing pains -- their databases can't keep up and since static caching was a disaster, they've had to strip the pages of lots of information that seem obviously helpful to just put on the page without extra clicks.

 

Hopefully it's not an "asset light" server farm -- because it's noticeably worse and less user-friendly than Amazon.

[compoundinglife]

This is kind of frustrating. I know we've talked about the frustration of SYW but this is bad, too.

 

So, on Facebook, this morning they posted this:

 

"The only thing you’ll need to bring to the gym (besides yourself). http://shout.lt/pmBq"

 

It then links you to this:

 

http://www.sears.com/sportline-pocket-bottle/p-00614053000P?prdNo=3&blockNo=3&blockType=G3&sid=ISm21100224x004018

 

I was  thinking it's a bottle with a protein cup or something alone those lines. I look at the pictures...and, well, I don't know what that "pocket" is for. Random stuff?

 

I go to the description and it says:

 

"Pocket Bottle

Added on November 01, 2010"

 

No description of the pocket, no size....but hey, it's got the date on there!

 

I hop on amazon (it's more expensive on amazon)

 

http://www.amazon.com/Pocket-Bottle-Black/dp/B00BQ3W6R0

 

And, lo and behold, it has an actual description.

 

Integrated pocket stores small essentials such as money or ID

Sound-resistant pocket prevents contents from rattling

Easy to use flip-top

Bottle holds 28 oz / 825 ml

Built-in straw

 

 

Notice how it's not available for shipping?

 

This is a bribe to get you into a Sears store.  Unfortunately, the stores are ugly and about as devoid of character as that SYW listing that has no description and no comments.  So paying you money to get you into a Sears store -- it's not like you are going to come back after noticing that it's a store without personality.

 

Sort of like how the stores seem understaffed when you have a question, the SYW listing seems understaffed in that they didn't pay anyone to fill out a description.

 

We're sorry, this item is not available for store pickup within 50 miles of 98118

[adesigar]

Why is Sears.com that different from Amazon?

 

Amazon does the same. They show the lowest price available to see other sellers you have to click on more buying choices. They may show 1 or 2 in the side box but not all the sellers. In fact Sears has it selling for 9.49 and is nearly $5 cheaper than the amazon market place seller. Amazon has sellers as high as $24.99 + $5 Shipping.

 

What I see on Sears site is

 

Sears

Sale Price $9.99

Condition New

 

One Click LLC

Sale Price $18.48

Shipping Price $15.99

Condition New

 

Its basically just Sears marketplace sellers vs Amazon Market Place sellers. Sears is probably carrying it in 10 stores out of 3000 so it comes up on their site cause its in their database vs Amazon who is not selling it at all probably because shipping is to expensive and they would have to add it as an AddOn item.

[compoundinglife]

If you click from Sears and 1 partner it shows the partner that is selling it. (the Sears site sux compared to amazon).  But both sears.com and Sears marketplace are both growing rapidly.

 

 

I suspect they are having trouble with scalability of traffic to their site.  It would obviously be simpler to the user to NOT have to click on the link for such basic information, but it takes pressure off the database if they put as little information as possible onto the page.  That might be why the product also has no description -- however I may be getting too charitable here.

 

Remember last August when they had the same item multiple times in the database at different prices?  You would get an offer on the page, then when you put it in your cart they would change the price on you.  It was bait and switch.  But I think the problem there is they tried to do static page caching in order to improve site performance (take pressure off the database).

 

So they seem to be dealing with growing pains -- their databases can't keep up and since static caching was a disaster, they've had to strip the pages of lots of information that seem obviously helpful to just put on the page without extra clicks.

 

Hopefully it's not an "asset light" server farm -- because it's noticeably worse and less user-friendly than Amazon.

 

It could be that they are trying optimize to reduce load on their backend systems, it could also be just poor execution. It could be that they want to be able to see how many people actually go past looking at the first page and click on something. While it would be possible for them to use some client side/js tracking that could detect this without forcing the user to click they may not have functionality hence they need a click to get an idea of how many customers go past just looking at the ad. 

[ERICOPOLY]

Why is Sears.com that different from Amazon?

 

Amazon does the same. They show the lowest price available to see other sellers you have to click on more buying choices. They may show 1 or 2 in the side box but not all the sellers. In fact Sears has it selling for 9.49 and is nearly $5 cheaper than the amazon market place seller. Amazon has sellers as high as $24.99 + $5 Shipping.

 

What I see on Sears site is

 

Sears

Sale Price $9.99

Condition New

 

One Click LLC

Sale Price $18.48

Shipping Price $15.99

Condition New

 

Its basically just Sears marketplace sellers vs Amazon Market Place sellers. Sears is probably carrying it in 10 stores out of 3000 so it comes up on their site cause its in their database vs Amazon who is not selling it at all probably because shipping is to expensive and they would have to add it as an AddOn item.

 

Amazon doesn't force you to pick it up in the store.

 

You are comparing Apples to Oranges.  The low price you see on SYW is only if you pick it up in the store.  It is not available for online only shopping and home delivery.

 

It's just a gimmick to get you into a physical store.  Which is funny because in the physical store they probably tell you to use SYW more.

 

 

 

 

[adesigar]

Why is Sears.com that different from Amazon?

 

Amazon does the same. They show the lowest price available to see other sellers you have to click on more buying choices. They may show 1 or 2 in the side box but not all the sellers. In fact Sears has it selling for 9.49 and is nearly $5 cheaper than the amazon market place seller. Amazon has sellers as high as $24.99 + $5 Shipping.

 

What I see on Sears site is

 

Sears

Sale Price $9.99

Condition New

 

One Click LLC

Sale Price $18.48

Shipping Price $15.99

Condition New

 

Its basically just Sears marketplace sellers vs Amazon Market Place sellers. Sears is probably carrying it in 10 stores out of 3000 so it comes up on their site cause its in their database vs Amazon who is not selling it at all probably because shipping is to expensive and they would have to add it as an AddOn item.

 

Amazon doesn't force you to pick it up in the store.

 

You are comparing Apples to Oranges.  The low price you see on SYW is only if you pick it up in the store.  It is not available for online only shopping and home delivery.

 

It's just a gimmick to get you into a physical store.  Which is funny because in the physical store they probably tell you to use SYW more.

 

You mean Amazon doesn't have stores.

 

All companies with physical stores show items on their site which are only available in store. Walmart, Home Depot, Target, BestBuy, BedBath etc. all these companies will list the item even if they have 1 last piece of it left in 1 store somewhere. All of them have items exclusively available in store. Why does Amazon the not carry that item but sears does? Because they would lose money on it with free shipping and not enough people will buy it to have it in their inventory as an AddOn item.

 

Also if you are a SYW member and logged in you don't have to go searching for it by zip code, city etc.. Its knows your preferred stores and tells you if its available or out of stock at your preferred locations.

[bmichaud]

I love Buffett's quote in last year's annual letter regarding BRK's Berkadia segment:

 

Berkadia continues to do well. Our partners at Leucadia do most of the work in this venture, an arrangement that Charlie and I happily embrace.

 

I view Berkowitz's and Baker Street's work on Sears' real estate the same way. We should count ourselves lucky to have their analysis entirely free of charge. 

 

I found this interesting from BB's March 2009 OID interview on page 15

 

OID: So you think Sears can pay off their debt - or refinance it at reasonable terms?

BB: I think the answer to both questions is yes. And if Eddie Lampert has any difficulties, I think he should call Fairholme because we would be willing to help him at the right price.

 

 

Between Lampert's personal resources and Fairholme's resources, I really believe an extremely distressed scenario is off the table. Berkowitz said that in March 2009 in the middle of Great Depression 2.0. Now? Cap rates are low, A-quality mall demand is high, money is easy and the economy is improving. There is just sooooo much optionality here it's scary. Who knows what the stock does in the short term, as the market focuses on the dying retail operations....but longer term, the biggest risk at these levels appears to be NOT owning the stock.

 

 

Baker Report: http://www.bakerstreetcapital.com/BakerStreet_SHLD.pdf

 

March 2009 OID: http://www.grahamanddoddsville.net/wordpress/Files/Gurus/Bruce%20Berkowitz/OID%20-%20Bruce%20Berkowitz%20-%203-17-2009.pdf

[krazeenyc]

Why is Sears.com that different from Amazon?

 

Amazon does the same. They show the lowest price available to see other sellers you have to click on more buying choices. They may show 1 or 2 in the side box but not all the sellers. In fact Sears has it selling for 9.49 and is nearly $5 cheaper than the amazon market place seller. Amazon has sellers as high as $24.99 + $5 Shipping.

 

What I see on Sears site is

 

Sears

Sale Price $9.99

Condition New

 

One Click LLC

Sale Price $18.48

Shipping Price $15.99

Condition New

 

Its basically just Sears marketplace sellers vs Amazon Market Place sellers. Sears is probably carrying it in 10 stores out of 3000 so it comes up on their site cause its in their database vs Amazon who is not selling it at all probably because shipping is to expensive and they would have to add it as an AddOn item.

 

Amazon doesn't force you to pick it up in the store.

 

You are comparing Apples to Oranges.  The low price you see on SYW is only if you pick it up in the store.  It is not available for online only shopping and home delivery.

 

It's just a gimmick to get you into a physical store.  Which is funny because in the physical store they probably tell you to use SYW more.

 

FWIW I don't think they're trying to get you in store. This item is basically an error in the system at least near me - it's not in stock in any store.

 

http://www.sears.com/search=camelot%20jr

 

I bought this for my kid -- this is how their marketplace is supposed to show up etc. and if you have shop your way max -- it shows up as SYW Max free shipping. (Notice Overstock.com is an authorized SYW reseller).

 

(i think eventually they would like to do fulfillment for other stores in malls)

 

[MrB]

I love Buffett's quote in last year's annual letter regarding BRK's Berkadia segment:

 

Berkadia continues to do well. Our partners at Leucadia do most of the work in this venture, an arrangement that Charlie and I happily embrace.

 

I view Berkowitz's and Baker Street's work on Sears' real estate the same way. We should count ourselves lucky to have their analysis entirely free of charge. 

 

I found this interesting from BB's March 2009 OID interview on page 15

 

OID: So you think Sears can pay off their debt - or refinance it at reasonable terms?

BB: I think the answer to both questions is yes. And if Eddie Lampert has any difficulties, I think he should call Fairholme because we would be willing to help him at the right price.

 

 

Between Lampert's personal resources and Fairholme's resources, I really believe an extremely distressed scenario is off the table. Berkowitz said that in March 2009 in the middle of Great Depression 2.0. Now? Cap rates are low, A-quality mall demand is high, money is easy and the economy is improving. There is just sooooo much optionality here it's scary. Who knows what the stock does in the short term, as the market focuses on the dying retail operations....but longer term, the biggest risk at these levels appears to be NOT owning the stock.

 

 

Baker Report: http://www.bakerstreetcapital.com/BakerStreet_SHLD.pdf

 

March 2009 OID: http://www.grahamanddoddsville.net/wordpress/Files/Gurus/Bruce%20Berkowitz/OID%20-%20Bruce%20Berkowitz%20-%203-17-2009.pdf

 

You said it bmichaud. "optionality" is the key word. Quite possibly more important than certainty, especially in a situation like this.

 

So three questions really,

a) Does the current valuation provide a sufficient margin of safety?

b) Is Eddie on your side?, and

c) does he have sufficient options?

[muscleman]

I love Buffett's quote in last year's annual letter regarding BRK's Berkadia segment:

 

Berkadia continues to do well. Our partners at Leucadia do most of the work in this venture, an arrangement that Charlie and I happily embrace.

 

I view Berkowitz's and Baker Street's work on Sears' real estate the same way. We should count ourselves lucky to have their analysis entirely free of charge. 

 

I found this interesting from BB's March 2009 OID interview on page 15

 

OID: So you think Sears can pay off their debt - or refinance it at reasonable terms?

BB: I think the answer to both questions is yes. And if Eddie Lampert has any difficulties, I think he should call Fairholme because we would be willing to help him at the right price.

 

 

Between Lampert's personal resources and Fairholme's resources, I really believe an extremely distressed scenario is off the table. Berkowitz said that in March 2009 in the middle of Great Depression 2.0. Now? Cap rates are low, A-quality mall demand is high, money is easy and the economy is improving. There is just sooooo much optionality here it's scary. Who knows what the stock does in the short term, as the market focuses on the dying retail operations....but longer term, the biggest risk at these levels appears to be NOT owning the stock.

 

 

Baker Report: http://www.bakerstreetcapital.com/BakerStreet_SHLD.pdf

 

March 2009 OID: http://www.grahamanddoddsville.net/wordpress/Files/Gurus/Bruce%20Berkowitz/OID%20-%20Bruce%20Berkowitz%20-%203-17-2009.pdf

 

I do feel like most investors buy into SHLD according to those super investor's reports. But the question is what do you perceive this investment on your own?

People have been asking ESL to start a faster liquidation process, and from the cash position update in Q4, it seems like he is doing that work.

But I still don't understand why the same store comp could drop 9%. If he is liquidating the inventories fast, he will report a higher loss, but I think at least the sales comp should go up instead of down.

So maybe he is not doing what you wanted him to do. As another member pointed out, the cash increase is just seasonal.

Anyway, I am very unhappy with my investment in this sucker, but fortunately I have only a 5% position, so I am not feeling as painful as Baker Street.

What I especially don't understand is the reconciliation between GAAP and adjusted earnings. I expected the 700 mn reduction in pension liability due to interest rate increase to shock the short sellers, but it wasn't anywhere listed in the latest Q4 update.

"We currently expect our reported net loss attributable to Holdings' shareholders for the quarter ending February 1, 2014 will be between $250 million and $360 million, or between $2.35 and $3.39 loss per diluted share. This includes $41 million of pension expense, $29 million for store closures and severance and $12 million from gains on sales of assets. Adjusted for these items, net loss is expected to be between $213 million and $316 million, or between $2.01 and $2.98 loss per diluted share."