peridotcapital Posted May 28, 2014 Share Posted May 28, 2014 Agreed. Clearly everything is an estimate and almost nothing is analyzed in a vacuum. I agree with your assessment of the margin increase being the former, but I wouldn't be so skeptical on their internal analysis of stores with RFID vs not, and stores with digital displays vs. not. It's not difficult for a company to analyze this stuff when they have a huge portfolio of stores. This is a small improvement that might have significant margin implications. A margin % increase by 1% or 2% over a $20 Billion revenue base at Sears can equate to hundreds of millions improvement in EBITDA. Not a game changer, but a help. I'm skeptical simply because I think their retail problem is just as much a demand problem (or moreso even) than it is a management problem. Is gross margin falling because they need to cut prices more now to move the same merchandise, or is inventory management so bad that their assortment imbalances are causing the need to discount? I think it's the former, so I don't think RFID is going to help all that much. But since Eddie can't fix the demand issue, he should focus on things he can control (like inventory mgmt). Doesn't mean it's going to work though... I hope they didnt just add digital signs and RFID and compare financial metrics before and after... that doesn't shed much light on correlation vs causation. But you're right, at this point 1% gross margin is hundreds of millions per year... it could fund the pension for instance... better than using the revolver... Link to comment Share on other sites More sharing options...
Luke 532 Posted May 29, 2014 Share Posted May 29, 2014 (4) Potential Sales Proceeds - I'm going to sound like the boy who cried wolf here, but I would be highly surprised if they don't buy back some shares and/or debt in the next six months using sales proceeds from Sears Canada and/or Sears Auto. (Full Disclosure: I've been waiting for ESL to buy back shares since January of this year and it hasn't happened yet.) However, the following piece of the conference call seems to signal that they're looking into this as well: Also note that, should we be successful in monetizing our 51% stake in Sears Canada, this would result in cash proceeds of approximately $730 million at current market values. As indicated on the slide, this affords us the option, should we decide to do so, to apply those proceeds to our domestic revolver. I would note that under the terms of our domestic revolver agreement, we have flexibility in how we use those proceeds. We are not required to apply these proceeds to the outstanding revolver balance. If we have received these proceeds and decided to apply them to the domestic revolver outstanding balance, then availability under our domestic revolver would have been $1.5 billion had the transaction taken place as of the end of our fiscal first quarter. ... I would also note that we would continue to de-lever our balance sheet and increase our availability to the extent we are successful in monetizing our 51% stake in Sears Canada, which currently has a market value of about $730 million. As indicated on the slide, this affords us the option, should we decide to do so, to apply those proceeds to our domestic revolver. Had such a transaction taken place as of the end of our first fiscal quarter, and had we applied those proceeds to the outstanding domestic revolver balance, we would have had no net short-term debt. Actually, we would have been net cash positive. I would also note that we currently have $500 million of authorization remaining for share repurchases, as well as $275 million of authorization remaining for repurchases of our debt. As we have commented, we believe that we have ample liquidity to run the business and also have the benefit of access to a rich portfolio of assets. The fact that they referred to their flexibility with how they can use the proceeds and the mention of their share and debt buyback authorizations makes me think that they're very likely to buyback shares using the proceeds from Sears Canada and/or Sears Auto. It would be very interesting to see how the market reacts to a buyback. :) I'm not counting on it but it's another lever that Lampert could pull. Link to comment Share on other sites More sharing options...
Luke 532 Posted May 29, 2014 Share Posted May 29, 2014 Latest from NREI Retail... Is Sears Real Estate Really Losing its Value? http://nreionline.com/retail/sears-real-estate-really-losing-its-value?NL=RET-01&Issue=RET-01_20140529_RET-01_658&YM_RID=larson777@gmail.com&YM_MID=1468732&sfvc4enews=42&cl=article_1_b Link to comment Share on other sites More sharing options...
jeffmori7 Posted May 29, 2014 Share Posted May 29, 2014 This stock is really crazy..7% on no news? Link to comment Share on other sites More sharing options...
Luke 532 Posted May 29, 2014 Share Posted May 29, 2014 This stock is really crazy..7% on no news? Nothing abnormal, par for the course when it comes to SHLD. And a perfect example of market inefficiencies. The market does not know how to value SHLD... hence the long-term opportunity. Link to comment Share on other sites More sharing options...
jeffmori7 Posted May 29, 2014 Share Posted May 29, 2014 This stock is really crazy..7% on no news? Nothing abnormal, par for the course when it comes to SHLD. I know, but it still amazes me :) Link to comment Share on other sites More sharing options...
BTShine Posted May 29, 2014 Share Posted May 29, 2014 Investing in the days of newspaper quotes by the 1/8th and 1/16th would've been nice. It would save a lot of people from checking stock quotes throughout the day! Link to comment Share on other sites More sharing options...
Luke 532 Posted May 29, 2014 Share Posted May 29, 2014 Sears Canada slashes credit facility to save on borrowing costs http://business.financialpost.com/2014/05/28/sears-canada-slashes-credit-facility-to-save-on-borrowing-costs/ Sears Canada has dramatically reduced the size of its credit facility to $300-million from $800-million in order to save money on unnecessary borrowing costs, the retailer said Wednesday. “The existing facility has been undrawn, even for seasonal purposes, since March of 2012,” chief executive Douglas Campbell said in a statement, saying the move allows the company to lower annual undrawn fees on the facility by more than 70%. The retailer has been raising cash through selling off prime urban leases slashing costs to reach for a more sustainable operating structure. “Together with our existing cash flow and working capital, this will provide us the flexibility we need to meet our long term goals,” Mr. Campbell said. The company said on Wednesday that it has extended the term of its senior secured revolving credit facility to May 2019 from the original maturity date of Sept. 2015. Sears Canada’s credit facility is held by a syndicate of lenders administered by Wells Fargo Capital Finance, part of Wells Fargo & Co. Link to comment Share on other sites More sharing options...
tiddman Posted May 29, 2014 Share Posted May 29, 2014 Not sure this is +7% news. Is decreased access to credit really good news? Link to comment Share on other sites More sharing options...
Luke 532 Posted May 29, 2014 Share Posted May 29, 2014 Not sure this is +7% news. Is decreased access to credit really good news? Today's jump likely has absolutely nothing to do with the Canada credit news. Just Mr. Market being Mr. Market. Link to comment Share on other sites More sharing options...
wisdom Posted May 29, 2014 Share Posted May 29, 2014 Who knows - it could be Mr Market being surprised that SHLD does not need the larger facility as they expect SHLD to be bankrupt by next year. They could interpret this to imply that SHLD will be around a while longer. Link to comment Share on other sites More sharing options...
Luke 532 Posted May 30, 2014 Share Posted May 30, 2014 Very minor deal but I wonder how many of these deals/transactions/negotiations are going on behind the scenes and will never hit the major news outlets. Former Sears distribution center sold http://theadvocate.com/news/business/9311587-123/former-sears-distribution-center-sold Link to comment Share on other sites More sharing options...
Luke 532 Posted May 31, 2014 Share Posted May 31, 2014 Sears Holdings: What Investors Are Missing http://www.fool.com/investing/general/2014/05/31/sears-holdings-what-people-are-missing.aspx Link to comment Share on other sites More sharing options...
Mephistopheles Posted May 31, 2014 Share Posted May 31, 2014 Sears Holdings: What Investors Are Missing http://www.fool.com/investing/general/2014/05/31/sears-holdings-what-people-are-missing.aspx "The program cost $38 million in the first quarter" $38 million was the YoY increase in SYW points spending, not the total cost. Link to comment Share on other sites More sharing options...
BTShine Posted June 1, 2014 Share Posted June 1, 2014 Sears Holdings: What Investors Are Missing http://www.fool.com/investing/general/2014/05/31/sears-holdings-what-people-are-missing.aspx "The program cost $38 million in the first quarter" $38 million was the YoY increase in SYW points spending, not the total cost. I saw that, too. Big difference. It's hard to say what SYW costs are running, but I'm guessing it's $500 - $750 milllion a year. Some of that in the cost of points. Some in the cost of computer programming, marketing, etc. Link to comment Share on other sites More sharing options...
merkhet Posted June 2, 2014 Share Posted June 2, 2014 A talk on making behavior addictive by Yale professor Zoë Chance. Remind anyone of the SYW program? Link to comment Share on other sites More sharing options...
Luke 532 Posted June 2, 2014 Share Posted June 2, 2014 A talk on making behavior addictive by Yale professor Zoë Chance. Remind anyone of the SYW program? Interesting. Thanks for posting. Link to comment Share on other sites More sharing options...
ni-co Posted June 2, 2014 Share Posted June 2, 2014 A talk on making behavior addictive by Yale professor Zoë Chance. Remind anyone of the SYW program? Interesting. Thanks for posting. Yes, certainly looks like research Lampert is intimate with. Implementation is key, though. Link to comment Share on other sites More sharing options...
Luke 532 Posted June 2, 2014 Share Posted June 2, 2014 A talk on making behavior addictive by Yale professor Zoë Chance. Remind anyone of the SYW program? Interesting. Thanks for posting. Yes, certainly looks like research Lampert is intimate with. Implementation is key, though. The video uses Strive (interactive pedometer) as an example. For those that haven't seen the following website, Lampert introduced Fit Studio awhile back: https://www.fitstudio.com/ I know the point of posting the video is not to promote a fitness-related program, but it is still interesting that Lampert has a points-earning fitness initiative. Link to comment Share on other sites More sharing options...
Luke 532 Posted June 3, 2014 Share Posted June 3, 2014 Metascale Introduces "Ready-to-Go" Hadoop-Based Analytics Delivered as a Service, Without Major Investment June 3, 2014: http://www.marketwatch.com/story/metascale-introduces-ready-to-go-hadoop-based-analytics-delivered-as-a-service-without-major-investment-2014-06-03?reflink=MW_news_stmp Link to comment Share on other sites More sharing options...
20ppy Posted June 4, 2014 Share Posted June 4, 2014 Has anyone been to the “Connected Solutions” shops at Sears? I am personally always interested in this kind of stuff and there has not been a good place that brings all these together. I hope they do well with new product lines, after being thru hell, for a change. Link to comment Share on other sites More sharing options...
Luke 532 Posted June 4, 2014 Share Posted June 4, 2014 New SHC Speaks blog post: http://blog.searsholdings.com/leadership-viewpoint/serving-our-members-through-connected-solutions/ "As a member-focused organization, we will help our members learn how to... get a perfectly grilled steak while entertaining guests..." Mmmm, steak. Link to comment Share on other sites More sharing options...
hardincap Posted June 4, 2014 Share Posted June 4, 2014 I cant understand how people can be optimistic about a turnaround after visiting shopyourway.com. The site is terrible. Why don't they just copy amazon? Sometimes its better to copy what is clearly working, and not try to be original. Link to comment Share on other sites More sharing options...
constructive Posted June 4, 2014 Share Posted June 4, 2014 I cant understand how people can be optimistic about a turnaround after visiting shopyourway.com. The site is terrible. Why don't they just copy amazon? Sometimes its better to copy what is clearly working, and not try to be original. To be fair, sears.com and kmart.com are higher traffic sites and they are a little better designed. Although still weak compared to Amazon, Overstock, Macy's, etc. According to Alexa, Sears is #146, Kmart is #432 and SYW is #1441 in the US. Link to comment Share on other sites More sharing options...
moody202 Posted June 4, 2014 Share Posted June 4, 2014 I cant understand how people can be optimistic about a turnaround after visiting shopyourway.com. The site is terrible. Why don't they just copy amazon? Sometimes its better to copy what is clearly working, and not try to be original. Agree. The website is like going to the store. It looks cluttered and old compared to competition. If feels like Sears hired folks you had last designed a website in 2005 and completed missed on new sites are put together! Eddie just doesn't seem to have a clue! Link to comment Share on other sites More sharing options...
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