SHLDQ - Sears Holdings Corp

[BTShine]

I think it's most likely SYW will try to do this with their 3rd party vendors on Sears.com before joining up with GAP, but that's just my assumption. 

[Mephistopheles]

Just FYI for those looking at options, the $40-strike 2016 (24 months) calls are going for $8.45.

 

How will this work for the Lands End spinoff? The strike gets adjusted downwards, is that right?

 

Also, the record date has not been announced yet, right? I am looking through the prospectus and it has blank spots in place of wherever it should show the date.

[Luke 532]

Just FYI for those looking at options, the $40-strike 2016 (24 months) calls are going for $8.45.

 

How will this work for the Lands End spinoff? The strike gets adjusted downwards, is that right?

 

Also, the record date has not been announced yet, right? I am looking through the prospectus and it has blank spots in place of wherever it should show the date.

 

Strike would be adjusted down.  You'll see on the options chain a bunch of strikes are $XX.42, so they'll look funky again once readjusted.

 

No record date announced yet.

[Guest qanary]

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/call-options-post-spinoff/

 

Just FYI for those looking at options, the $40-strike 2016 (24 months) calls are going for $8.45.

 

How will this work for the Lands End spinoff? The strike gets adjusted downwards, is that right?

 

Also, the record date has not been announced yet, right? I am looking through the prospectus and it has blank spots in place of wherever it should show the date.

[ERICOPOLY]

I think it's most likely SYW will try to do this with their 3rd party vendors on Sears.com before joining up with GAP, but that's just my assumption.

 

The Sears real estate is located in the mall though -- so you would want to leverage that uniquenesss.  It would be a shame if the other stores at that very mall could not participate.

 

They all want their online customers to pick up the item in the store, or to return the item to their store, so their salesperson can tackle them, tie them down, and make them buy more things.

 

One of the problems with online shopping is losing that personal customer contact.  That might lead to less sales, and therefore less pressure on rents at the mall.  Suppose you are a mall REIT executive -- you would want to perhaps help SHLD get this done as it drives up the value of your owned properties.

 

But anyways, just a brainstorm.

[Luke 532]

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/call-options-post-spinoff/

 

I'm not so sure the info in that thread is always correct.  Then again, my answer may have been incorrect, too.  We'll get details from CBOE once the spin-off dates are announced.  I remember back in the General Growth Properties days that they had some funky stuff with their options post-bankruptcy.

[tombgrt]

Just FYI for those looking at options, the $40-strike 2016 (24 months) calls are going for $8.45.

 

Thanks Luke. Bought in with some at $8.35. Looks like a good start although I'd wish we went below $30 first.

[bmichaud]

REIT potential???

 

http://www.theflyonthewall.com/permalinks/entry.php/SHLDid1946035/SHLD-Rumor-Job-posting-leads-to-speculation-of-Sears-REIT-planning

 

 

[adesigar]

http://jobs.sears.com/career/209443/Manager-Property-Tax-Illinois-Il-Hoffman-Estates

 

Sears Reit ??

 

BMI beat me to it

and damn look at that spike with just the speculation of Sears + REIT

[JAllen]

http://jobs.sears.com/career/209443/Manager-Property-Tax-Illinois-Il-Hoffman-Estates

 

Sears Reit ??

 

 

BMI beat me to it

 

 

Property taxes don't really pertain to REIT/corporate income tax.  I don't think this is REIT related.  It's about managing and minimizing property taxes.

 

 

"Responsible for minimizing the company’s property tax liabilities through tax savings. Handle all property tax litigation and audits, which include cost, benefit analysis, retaining legal counsel, retaining outside appraisal experts and any internal experts. This position is involved in strategic planning by analyzing property tax implications and developing tax structures for potential future sites. This position must negotiate, testify and represent the company on tax appeals and litigation with state and local taxing authorities and legal representatives."

[CorpRaider]

?  I don't get it.  They have property, it is taxed, they need someone to manage it.  They already have two REIT subs, right?  I remember I was pretty geeked up about that until I discovered neither is domiciled in Maryland as are 90%+ of publicly traded REITs.  Not that that is definitive, but it sort of threw a wet blanket on my enthusiasm.

[alertmeipp]

wow, this is news?

[JAllen]

http://jobs.sears.com/

 

 

This is interesting.

 

 

• 10,722 open jobs
  
• 1,223 in automotive
  

[alertmeipp]

and the volume actually spike quite a bit.

 

what happen to their credit card business? is it sold?

[peridotcapital]

Well folks, I'm now long SHOS, in addition to my existing position in Sears Canada. At this rate, I'll be a SHLD bull in no time :)

 

Interesting tidbit I saw while reading up on SHOS. In 2012, 56% of their revenue came from KCD products. That comes to $1.37 billion of KCD retail sales through SHOS's 1,200+ stores. SHLD consigns this merchandise to SHOS stores, and then the dealer gets a cut when the products are sold. How likely is it that SHLD makes a 10% margin on their wholesale KCD sales to SHOS? In that case KCD's profit from SHOS alone could be ~$100M. Just an interesting data point that may be useful when trying to peg a value for KCD... especially in a scenario where SHLD's retail store base is a fraction of what it is today...

[krazeenyc]

Well folks, I'm now long SHOS, in addition to my existing position in Sears Canada. At this rate, I'll be a SHLD bull in no time :)

 

Interesting tidbit I saw while reading up on SHOS. In 2012, 56% of their revenue came from KCD products. That comes to $1.37 billion of KCD retail sales through SHOS's 1,200+ stores. SHLD consigns this merchandise to SHOS stores, and then the dealer gets a cut when the products are sold. How likely is it that SHLD makes a 10% margin on their wholesale KCD sales to SHOS? In that case KCD's profit from SHOS alone could be ~$100M. Just an interesting data point that may be useful when trying to peg a value for KCD... especially in a scenario where SHLD's retail store base is a fraction of what it is today...

 

They do not. They make a 0% margin on the items. However, it allows them to keep their bulk discount (don't know how much that is exactly). They do get a KCD royalty of appx 4%.

[BTShine]

Well folks, I'm now long SHOS, in addition to my existing position in Sears Canada. At this rate, I'll be a SHLD bull in no time :)

 

Interesting tidbit I saw while reading up on SHOS. In 2012, 56% of their revenue came from KCD products. That comes to $1.37 billion of KCD retail sales through SHOS's 1,200+ stores. SHLD consigns this merchandise to SHOS stores, and then the dealer gets a cut when the products are sold. How likely is it that SHLD makes a 10% margin on their wholesale KCD sales to SHOS? In that case KCD's profit from SHOS alone could be ~$100M. Just an interesting data point that may be useful when trying to peg a value for KCD... especially in a scenario where SHLD's retail store base is a fraction of what it is today...

 

They do not. They make a 0% margin on the items. However, it allows them to keep their bulk discount (don't know how much that is exactly). They do get a KCD royalty of appx 4%.

 

SHLD sells to SHOS at cost.  But, if KCD was spun off from SHLD then KCD could sell to SHLD.  No? 

 

Cheers!

 

(Parsad, hopefully it's cool I use cheers, too :) 

[BTShine]

Prediction for Lands' End. 

 

It looks to be on track to earn $65 million this year.  So, I believe the company will trade in the market for around $900 million market cap.  This is worth about $9 a share of SHLD.

 

 

 

[peridotcapital]

Well folks, I'm now long SHOS, in addition to my existing position in Sears Canada. At this rate, I'll be a SHLD bull in no time :)

 

Interesting tidbit I saw while reading up on SHOS. In 2012, 56% of their revenue came from KCD products. That comes to $1.37 billion of KCD retail sales through SHOS's 1,200+ stores. SHLD consigns this merchandise to SHOS stores, and then the dealer gets a cut when the products are sold. How likely is it that SHLD makes a 10% margin on their wholesale KCD sales to SHOS? In that case KCD's profit from SHOS alone could be ~$100M. Just an interesting data point that may be useful when trying to peg a value for KCD... especially in a scenario where SHLD's retail store base is a fraction of what it is today...

 

They do not. They make a 0% margin on the items. However, it allows them to keep their bulk discount (don't know how much that is exactly). They do get a KCD royalty of appx 4%.

 

Interesting, thanks. Do you know if the royalty is based on wholesale or retail pricing?

[krazeenyc]

it's 4% of the wholesale (4% of the sales they sell to SHOS since it's 0% markup)

[Mephistopheles]

Prediction for Lands' End. 

 

It looks to be on track to earn $65 million this year.  So, I believe the company will trade in the market for around $900 million market cap.  This is worth about $9 a share of SHLD.

 

 

 

 

Hey BT, where are you getting the $65 million # from? According to the prospectus, they earned $33 million in the first 39 weeks of 2013. Their 2012 net income was $50 million and it's been on a ugly downturn for the last 5 years.

 

EDIT: Completely neglected the 4th quarter effect. So yes, 65mn seems about right.

 

Though it has been a terrible decline since 2008. So a 14x multiple seems a bit steep. Any thoughts on the decline?

[krazeenyc]

Prediction for Lands' End. 

 

It looks to be on track to earn $65 million this year.  So, I believe the company will trade in the market for around $900 million market cap.  This is worth about $9 a share of SHLD.

 

 

 

 

Hey BT, where are you getting the $65 million # from? According to the prospectus, they earned $33 million in the first 39 weeks of 2013. Their 2012 net income was $50 million and it's been on a ugly downturn for the last 5 years.

 

EDIT: Completely neglected the 4th quarter effect. So yes, 65mn seems about right.

 

Though it has been a terrible decline since 2008. So a 14x multiple seems a bit steep. Any thoughts on the decline?

 

I expect that a VF Corp or a Sycamore partners would be drooling to run Lands End.

[zarley]

I expect that a VF Corp or a Sycamore partners would be drooling to run Lands End.

 

I think that's the best case scenario for SHLD and LE right now.  Is there any reason to spin LE off rather than selling it directly to a third party?

[Matson125]

I expect that a VF Corp or a Sycamore partners would be drooling to run Lands End.

 

I think that's the best case scenario for SHLD and LE right now.  Is there any reason to spin LE off rather than selling it directly to a third party?

 

There have been multiple reports that Sears has tried to sell Lands End however there have been not buyers at the price Sears was asking, which was in the reported to be atleast a billion.

[peridotcapital]

Well folks, I'm now long SHOS, in addition to my existing position in Sears Canada. At this rate, I'll be a SHLD bull in no time :)

 

Interesting tidbit I saw while reading up on SHOS. In 2012, 56% of their revenue came from KCD products. That comes to $1.37 billion of KCD retail sales through SHOS's 1,200+ stores. SHLD consigns this merchandise to SHOS stores, and then the dealer gets a cut when the products are sold. How likely is it that SHLD makes a 10% margin on their wholesale KCD sales to SHOS? In that case KCD's profit from SHOS alone could be ~$100M. Just an interesting data point that may be useful when trying to peg a value for KCD... especially in a scenario where SHLD's retail store base is a fraction of what it is today...

 

They do not. They make a 0% margin on the items. However, it allows them to keep their bulk discount (don't know how much that is exactly). They do get a KCD royalty of appx 4%.

 

SHLD sells to SHOS at cost.  But, if KCD was spun off from SHLD then KCD could sell to SHLD.  No? 

 

Cheers!

 

(Parsad, hopefully it's cool I use cheers, too :)

 

It seems odd to me that Sears is better off from a financial standpoint selling KCD products wholesale to Ace Hardware or Costco than to SHOS (I'm assuming they don't sell to unaffiliated third parties at cost as well). KCD gets a royalty on everything, so that subsidiary doesn't care where the sale takes place. But from SHLD's perspective, it seemed like SHOS could grow independently and be a retailer for KCD products long-term, which would offset the decline in KCD sales coming from the ever-shrinking Sears/Kmart store base. But SHLD stands to make more selling in their own stores or Ace/Costco vs selling to SHOS at cost and having the dealer/franchisee commission come back to SHOS, not SHLD. Now you could say that KCD is part of SHLD, and they are getting paid, so what's the difference... but in the SHLD world where every subsidiary competes with each other that seems like a strange justification. Or maybe I'm just missing something more obvious. Not that this is hugely important anyway...