SHLDQ - Sears Holdings Corp

[Luke 532]

Short interest 15.59M as of 3/31/2014 (vs. 17.09M as of 3/14/2014).

http://www.nasdaq.com/symbol/shld/short-interest

[adesigar]

Short interest 15.59M as of 3/31/2014 (vs. 17.09M as of 3/14/2014).

http://www.nasdaq.com/symbol/shld/short-interest

 

Short interest dropped as expected.

It should be increasing now after the spin off.

[FCharlie]

Think I finally found a more poorly run business than Sears and K-Mart retail stores...and it's Sears Automotive. Awful experience with them. My wife had a terrible experience with them recently as well and for some reason I stupidly tried to give them a shot. They put the wrong person's tires on my car and let the other person drive away with my tires. Seems like every single experience I have with anything related to Sears is a disaster.

 

Here's a good one for you.

 

A friend of mine put a dishwasher on layaway at Sears last year. The day after she put it on layaway, Sears called her to set up the delivery and installation. She told them it was on layaway and she hadn't finished paying for it. The next week, Sears called again to try and set up delivery and installation. This time she told them to go ahead and deliver it. Later that week, Sears called to cancel delivery.  A week later, Sears called again to set up delivery and installation. Again, she told them to deliver it, which this time they did.

 

Of course, the dishwasher wasn't completely paid for yet. This person then chose to stop making the layaway payments. After the automated system recognized that the layaway payments had stopped, they cancelled the layaway, and refunded automatically the money that was paid, minus the restocking fee.

 

Anyone who puts any hope into this company being anything more than a liquidation and a real estate play is delusional... In my opinion.

 

 

[heth247]

Anyone who puts any hope into this company being anything more than a liquidation and a real estate play is delusional... In my opinion.

 

Fcharlie, you used to be a long time bull of this company and Eddie. What has changed your mind? Was it just anecdotes like this?

[enoch01]

Think I finally found a more poorly run business than Sears and K-Mart retail stores...and it's Sears Automotive. Awful experience with them. My wife had a terrible experience with them recently as well and for some reason I stupidly tried to give them a shot. They put the wrong person's tires on my car and let the other person drive away with my tires. Seems like every single experience I have with anything related to Sears is a disaster.

 

Here's a good one for you.

 

A friend of mine put a dishwasher on layaway at Sears last year. The day after she put it on layaway, Sears called her to set up the delivery and installation. She told them it was on layaway and she hadn't finished paying for it. The next week, Sears called again to try and set up delivery and installation. This time she told them to go ahead and deliver it. Later that week, Sears called to cancel delivery.  A week later, Sears called again to set up delivery and installation. Again, she told them to deliver it, which this time they did.

 

Of course, the dishwasher wasn't completely paid for yet. This person then chose to stop making the layaway payments. After the automated system recognized that the layaway payments had stopped, they cancelled the layaway, and refunded automatically the money that was paid, minus the restocking fee.

 

Anyone who puts any hope into this company being anything more than a liquidation and a real estate play is delusional... In my opinion.

 

That was fantastic.  Thanks for sharing.

[BTShine]

So, in the end Sears gave away the appliances for free?

[SouthernYankee]

Roll that dice, Daddy needs a new pair of shoes.

 

has been replaced with

 

Put it on layaway, Daddy AND MOMMY need a new refrigerator!

 

;D

[txlaw]

Think I finally found a more poorly run business than Sears and K-Mart retail stores...and it's Sears Automotive. Awful experience with them. My wife had a terrible experience with them recently as well and for some reason I stupidly tried to give them a shot. They put the wrong person's tires on my car and let the other person drive away with my tires. Seems like every single experience I have with anything related to Sears is a disaster.

 

Here's a good one for you.

 

A friend of mine put a dishwasher on layaway at Sears last year. The day after she put it on layaway, Sears called her to set up the delivery and installation. She told them it was on layaway and she hadn't finished paying for it. The next week, Sears called again to try and set up delivery and installation. This time she told them to go ahead and deliver it. Later that week, Sears called to cancel delivery.  A week later, Sears called again to set up delivery and installation. Again, she told them to deliver it, which this time they did.

 

Of course, the dishwasher wasn't completely paid for yet. This person then chose to stop making the layaway payments. After the automated system recognized that the layaway payments had stopped, they cancelled the layaway, and refunded automatically the money that was paid, minus the restocking fee.

 

Anyone who puts any hope into this company being anything more than a liquidation and a real estate play is delusional... In my opinion.

 

Unfortunately, I also have to chime in and give you guys some bad news re: Sears Online and the integrated retail experience that SHLD and SHOS are sinking money into creating.  The bottom line is that the vision is correct at the top, but the execution/implementation at the bottom is really bad.

 

Those of us who follow this thread have read the very justified criticisms of Sears Online.  For example, I think Ericopoly once pointed out how janky the Sears website was and how many lines of code was contained on each website page.  Well, the consequence of having such janky technology underlying Sears Online is that it is causing problems with the implementation of technology solutions that are supposed to make the bricks and mortar locations have a more "online shopping-like" customer experience.  For example, making your technology partners have to scrape your stupid website instead of providing an API for pulling inventory data is pretty idiotic.  Apparently, the inventory data is also not being kept as well as it should be.

 

This is really bad because part of the integrated retail experience is that you're supposed to be able to upsell and cross sell customers just like you would when they are shopping online.  But it's not gonna work if they don't implement all this stuff they're spending money on properly.  There appears to be a "we want technology" but "we can only spend this much" mentality that is being caused by budgetary pressures.  I'm guessing that the budgetary pressures come from the "survival of the fittest" fragmentation on the team level that causes them to focus solely on their current P&Ls.  It's like, management will say instead of spending money on big custom screens/hardware, why don't we just give sales associates iPads because that would be cheaper.  The iPads are basically worthless for the integrated retail experience, but because there is a mandate to spend money on technology, the iPads get bought because it will come under budget.

 

Honestly, if they are going to sink so much money into the online/integrated retail biz, they need to do a waaaaay better job than how they're doing it right now.  But my guess is that ESL has no clue how bad things really are at the more granular levels of the company. 

 

Yup, thank goodness for those assets they have on the balance sheet.  But the prospects of getting any retail upside continue to dwindle very fast.

[Myth465]

Finally some reasonable voices....

[20ppy]

Things will surely change when a tide comes in.

[Kraven]

I think everyone is off the mark here.  The other day I was in desperate need of a Remington Razor, some power tools and a fake mustache.  I didn't have a lot of time either and almost lost hope.  I thought why can't I buy all of these things in one store?  Then I remembered that Sears is the place for high end items like this and all was right with the world again.  I was able to pick everything up with the assistance of a helpful sales associate and get out of there lickety split.

[Guest hellsten]

Warning. The last time someone insulted the true prophet and reincarnation of Benjamin Graham this happened:

http://www.theonion.com/video/sears-extremists-fly-plane-into-willis-tower,29054/

[merkhet]

So I'll put the delusional hat on and point out some cognitive dissonance happening over here in CT.

 

On the one hand, we have reports that Sears is a terrible retailer -- just awful. Free dishwashers for everyone. Tires given away to other people. Disastrous online retail website.

 

On the other hand, somehow we have Sears increasing SSS in January and February versus the previous year. (I believe 1Q2013 SSS was only down about 1%, so this isn't a JCP story.)

 

Additionally, I got bored this morning and thought about why ESL has been focusing on inventory so much. It looks like inventory turnover has been increasing since hitting a nadir in 2011:

 

2007 2008 2009 2010 2011 2012 2013 2014

3.99 3.69   3.64 3.64 3.53    3.53 3.68   3.76

 

On a quarterly basis:

 

2012-01 0.93

2013-01 1.06

2014-01 1.02

 

2012-04 0.78

2013-04 0.81

 

2012-07 0.79

2013-07 0.86

 

2012-10 0.72

2013-10 0.76

[TeddyLampert]

So I'll put the delusional hat on and point out some cognitive dissonance happening over here in CT.

 

On the one hand, we have reports that Sears is a terrible retailer -- just awful. Free dishwashers for everyone. Tires given away to other people. Disastrous online retail website.

 

On the other hand, somehow we have Sears increasing SSS in January and February versus the previous year. (I believe 1Q2013 SSS was only down about 1%, so this isn't a JCP story.)

 

Additionally, I got bored this morning and thought about why ESL has been focusing on inventory so much. It looks like inventory turnover has been increasing since hitting a nadir in 2011:

 

2007 2008 2009 2010 2011 2012 2013 2014

3.99 3.69   3.64 3.64 3.53    3.53 3.68   3.76

 

On a quarterly basis:

 

2012-01 0.93

2013-01 1.06

2014-01 1.02

 

2012-04 0.78

2013-04 0.81

 

2012-07 0.79

2013-07 0.86

 

2012-10 0.72

2013-10 0.76

 

 

Merkhet

 

A big thank you for returning our attention to business analysis and salvaging this board from becoming another Stock Twit

 

;D

[peridotcapital]

So I'll put the delusional hat on and point out some cognitive dissonance happening over here in CT.

 

On the one hand, we have reports that Sears is a terrible retailer -- just awful. Free dishwashers for everyone. Tires given away to other people. Disastrous online retail website.

 

On the other hand, somehow we have Sears increasing SSS in January and February versus the previous year. (I believe 1Q2013 SSS was only down about 1%, so this isn't a JCP story.)

 

Additionally, I got bored this morning and thought about why ESL has been focusing on inventory so much. It looks like inventory turnover has been increasing since hitting a nadir in 2011:

 

2007 2008 2009 2010 2011 2012 2013 2014

3.99 3.69   3.64 3.64 3.53    3.53 3.68   3.76

 

On a quarterly basis:

 

2012-01 0.93

2013-01 1.06

2014-01 1.02

 

2012-04 0.78

2013-04 0.81

 

2012-07 0.79

2013-07 0.86

 

2012-10 0.72

2013-10 0.76

 

SSS were only positive in February (not January) and only for one of the two formats (they did not specify if it was Kmart or Sears). Regardless, not only is that a tiny data point, but if you aren't making money on those sales, it doesn't really matter how much you are selling. You can always increase promotions and get a sales boost, but your losses will grow, not shrink. Why is that desirable? Along the same lines, inventory turns don't mean a whole lot either. Selling product faster and/or stocking less product to begin with does not mean you are getting better margins. Eddie is right that they have a profit problem moreso than a sales problem (falling sales is also a problem, just less so), but he does not seem to understand how best to fix it.

[Matson125]

Sears Q4 2013 Earnings Call Transcript

http://seekingalpha.com/article/2055073-sears-holdings-management-discusses-q4-2013-results-earnings-call-transcript?all=true&find=sears

 

"While still early in the quarter, we are seeing positive domestic comparable store sales for the month of February for Sears full-line and Kmart formats combined."

[BTShine]

True.  January SSS was not positive vs January 2013, but it was improved vs the trend in Nov/Dec.  Call it -3% SSS in Jan vs. -7.4% in Nov/Dec. 

 

February had positive SSS YOY for all Domestic.  Does not break out if it was both formats, or if one format increased so much that it compensated for a flat, or negative, SSS at the other format. 

[merkhet]

Chad, you're right that January SSS was not positive -- it was an improvement to what they believed was going to happen which is why they comped -6.4% versus -7.4% for the quarter.

 

I'm not saying that SSS and inventory turn improvements mean Sears is in the clear. I'm merely saying that it looks like things are starting to improve on the retail -- and it will be interesting to see how things develop. It's just the counterpoint to the oft heard "Sears is a failing retailer" chorus.

[Guest wellmont]

Sears Q4 2013 Earnings Call Transcript

http://seekingalpha.com/article/2055073-sears-holdings-management-discusses-q4-2013-results-earnings-call-transcript?all=true&find=sears

 

"While still early in the quarter, we are seeing positive domestic comparable store sales for the month of February for Sears full-line and Kmart formats combined."

 

corporate spin at it's finest!

[20ppy]

I am wondering why Eddie isn't buying shares personally…

[merkhet]

I am wondering why Eddie isn't buying shares personally…

 

I've been wondering that since January...

[20ppy]

Maybe Eddie wants to wait until he spins off all the assets that he intends to spin off and then, begin serious buying? Does he know something that prevents him from buying? Now that his planed spin-off is announced, yet, he knows more about them than the public, would this be an issue? Had he not mentioned anymore spin-offs, he would have been better off?

[peridotcapital]

Risk Factor #9 in SHLD's 2013 10-K:

 

Potential liabilities in connection with the separation of Lands' End, Inc. may arise under fraudulent conveyance and transfer laws and legal capital requirements.

 

With respect to the LE Spin-off, if either Holdings or Lands' End subsequently fails to pay its creditors or enters insolvency proceedings, the transaction may be challenged under U.S. federal, U.S. state and foreign fraudulent conveyance and transfer laws, as well as legal capital requirements governing distributions and similar transactions. If a court were to determine under these laws that, (a) at the time of the LE Spin-off, the entity in question: (1) was insolvent; (2) was rendered insolvent by reason of the LE Spin-off; (3) had remaining assets constituting unreasonably small capital; (4) intended to incur, or believed it would incur, debts beyond its ability to pay these debts as they matured; or (b) the transaction in question failed to satisfy applicable legal capital requirements, the court could determine that the LE Spin-off was voidable, in whole or in part. Subject to various defenses, the court could then require Holdings or Lands' End, or other recipients of value in connection with the LE Spin-off (potentially including Lands' End stockholders as recipients of shares of Lands' End common stock in connection with the spin-off), as the case may be, to turn over value to other entities involved in the LE Spin-off and contemplated transactions for the benefit of unpaid creditors. The measure of insolvency and applicable legal capital requirements will vary depending upon the jurisdiction whose law is being applied.

 

I was curious if Sears had ever felt the need to include this in their risk factors for prior spin-offs so I went back and checked. Fraudulent conveyance has never been mentioned in previous 10-K filings, which I found interesting and thought I would share. They are clearly thinking about this issue more now than in prior years. Not sure there is anything more to read into it than that, however.

[merkhet]

I think it's because they've burned through their retained earnings this year prior to the spinoff.

[FCharlie]

Anyone who puts any hope into this company being anything more than a liquidation and a real estate play is delusional... In my opinion.

 

Fcharlie, you used to be a long time bull of this company and Eddie. What has changed your mind? Was it just anecdotes like this?

 

I still am!

 

I've owned SHLD for eight years. The first couple of years it was a token position because of Eddie Lampert. I made it a giant position in 2008 when the price collapsed. Those were the glory days. The stock was at $30 and Eddie repurchased millions of shares out of actual free cash flow. The fact that the retail operations are laughable isn't enough of a reason for me to sell. They've been laughable for the entire time I've owned SHLD. Shop Your Way pisses me off though. I'd rather see them winding everything down, buying back stock, and signing up tenants as opposed to dumping endless amounts of cash into SYWR.

 

So, there... I still own SHLD. I most likely won't sell unless Berkowitz or Eddie sell. I, like Berkowitz, don't see how you can lose long term.