heth247 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. Anybody compared the mobile app among these retailers? Link to comment Share on other sites More sharing options...
20ppy Posted June 5, 2014 Share Posted June 5, 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! Website is not bad, I've just joined SYW and it is reasonable, not as bad as some may think. Walmart.com is much worse in my opinion. Costco.com is the worst so far, but so what? In the end, it is the "meat" that the website delivers. Link to comment Share on other sites More sharing options...
Luke 532 Posted June 5, 2014 Share Posted June 5, 2014 It Pays to Fix Retail (June 4, 2014) http://nreionline.com/retail/it-pays-fix-retail?NL=RET-01&Issue=RET-01_20140605_RET-01_644&YM_RID=larson777@gmail.com&YM_MID=1469932&sfvc4enews=42&cl=article_1 Excerpts: “The search for yield is pulling more investors toward the retail real estate sector and this has led to a pop in values.” “The weight of this capital should lead to declining cap rates in second-tier assets and help to push values up.” Link to comment Share on other sites More sharing options...
peridotcapital Posted June 5, 2014 Share Posted June 5, 2014 It Pays to Fix Retail (June 4, 2014) http://nreionline.com/retail/it-pays-fix-retail?NL=RET-01&Issue=RET-01_20140605_RET-01_644&YM_RID=larson777@gmail.com&YM_MID=1469932&sfvc4enews=42&cl=article_1 Excerpts: “The search for yield is pulling more investors toward the retail real estate sector and this has led to a pop in values.” “The weight of this capital should lead to declining cap rates in second-tier assets and help to push values up.” And yet Eddie isn't selling at these high prices to reduce the $5B+ of debt/pension costs Sears has. Instead he'd rather operate retail stores. Odd. It will mark the second time in less than a decade when commercial real estate cap rates are about as low as they can get and Eddie doesn't sell in order to maximize value for shareholders. Even if he gets the retail operations to EBITDA positive by a couple of percentage points, much of the real estate is more valuable if its being used for other uses. With so much square footage and such a slow leasing rate to third parties so far, I don't understand why Eddie doesn't sell more properties outright. He didn't in 2006/2007 either. Link to comment Share on other sites More sharing options...
BTShine Posted June 5, 2014 Share Posted June 5, 2014 It Pays to Fix Retail (June 4, 2014) http://nreionline.com/retail/it-pays-fix-retail?NL=RET-01&Issue=RET-01_20140605_RET-01_644&YM_RID=larson777@gmail.com&YM_MID=1469932&sfvc4enews=42&cl=article_1 Excerpts: “The search for yield is pulling more investors toward the retail real estate sector and this has led to a pop in values.” “The weight of this capital should lead to declining cap rates in second-tier assets and help to push values up.” And yet Eddie isn't selling at these high prices to reduce the $5B+ of debt/pension costs Sears has. Instead he'd rather operate retail stores. Odd. It will mark the second time in less than a decade when commercial real estate cap rates are about as low as they can get and Eddie doesn't sell in order to maximize value for shareholders. Even if he gets the retail operations to EBITDA positive by a couple of percentage points, much of the real estate is more valuable if its being used for other uses. With so much square footage and such a slow leasing rate to third parties so far, I don't understand why Eddie doesn't sell more properties outright. He didn't in 2006/2007 either. Solid point. Good question. I believe Eddie said something along the lines of this... 'there's no doubt the real estate is very valuable, but if we are able to turn around the operations it will create much more value than is in the real estate.' That might not be the answer you're looking for, but it's how I understand his thoughts for SHLD. Link to comment Share on other sites More sharing options...
merkhet Posted June 5, 2014 Share Posted June 5, 2014 Quick thought experiment -- let's assume that a little less than half the properties have value. So let's think that 100 million square feet have value and you can keep close to $30 billion in sales because of the SYW platform. In that case, then you have about $300 per square foot in sales. At some point in 2006, ESL thought you might be able to get 10% op. margins, so let's say maybe 6% of that drops to net earnings or roughly $18 in net income per square foot. If they get a 12x multiple on those earnings, then you'll have a valuation of about $216 per square foot. If, instead, you sold the 100 million square feet @ a cap rate of 5% you need to sell the square footage for an average of about $10.8 per square foot. So my guess is that, in some cases, they're worth more as stores -- though in some cases, they might not be... Link to comment Share on other sites More sharing options...
peridotcapital Posted June 5, 2014 Share Posted June 5, 2014 Solid point. Good question. I believe Eddie said something along the lines of this... 'there's no doubt the real estate is very valuable, but if we are able to turn around the operations it will create much more value than is in the real estate.' That might not be the answer you're looking for, but it's how I understand his thoughts for SHLD. I can understand that for the leased stores and maybe many of the owned Kmarts, but not for the 500 or so owned Sears stores. The average Sears store is 136,000 sf and does $14.5 million in sales per year. Let's be very optimistic and assume I'm wrong and Eddie's retail turnaround works and he gets to 5% EBITDA margins ($725,000 per store). Put a 6x multiple on that and each store is worth roughly $4.35M. That's $32 per square foot. If he could sell some non-core Sears mall stores for $50-$100/sf why would he choose not do it, especially when cap rates are so low? Can Shop Your Way really not work with 500 Sears locations operating instead of the current 775? Link to comment Share on other sites More sharing options...
peridotcapital Posted June 5, 2014 Share Posted June 5, 2014 If, instead, you sold the 100 million square feet @ a cap rate of 5% you need to sell the square footage for an average of about $10.8 per square foot. If you sold 100M sf at $10.80/sf you would collect $1.08 billion. At a 5% cap rate, you are assuming the NOI on that space would only be $54 million annually. I think your math is way off... Link to comment Share on other sites More sharing options...
heth247 Posted June 5, 2014 Share Posted June 5, 2014 If, instead, you sold the 100 million square feet @ a cap rate of 5% you need to sell the square footage for an average of about $10.8 per square foot. If you sold 100M sf at $10.80/sf you would collect $1.08 billion. At a 5% cap rate, you are assuming the NOI on that space would only be $54 million annually. I think your math is way off... I don't understand the math as well. Isn't 5% cap rate equal to 20X multiples? That is still a good deal comparing to the 12X multiples, right? Link to comment Share on other sites More sharing options...
merkhet Posted June 5, 2014 Share Posted June 5, 2014 Sorry, it should say "rent" and not "sell" in that sentence. You would have to sell @ 20 * $10.8 per square foot to get to the same valuation. Link to comment Share on other sites More sharing options...
peridotcapital Posted June 5, 2014 Share Posted June 5, 2014 Sorry, it should say "rent" and not "sell" in that sentence. You would have to sell @ 20 * $10.8 per square foot to get to the same valuation. Gotcha. That lease rate is about 25% less than what Lands End is paying for their Sears space right now. Link to comment Share on other sites More sharing options...
jeffmori7 Posted June 6, 2014 Share Posted June 6, 2014 A quick check on http://www.shcrealty.com/ shows that there are 3077 operating store opportunities and 120 closed store opportunities. It appears that while Sears are closing a lot of store, they have difficulties selling, leasing, subleasing, transforming them at the same pace. So except for leases not renewed, the story is not always over once the closure or transformation is announced. we should try to keep track of those numbers over time. More than one month later..they are at 3075 operating store opportunities and 117 closed store opportunities...so it is going down..but really slowly. Operating store opportunities down to 3018, while closed are up to 119 opportunities. One month later: Operating store opportunities down to 2985, while closed ones are up to 137 opportunities. So there are some closed stores that are vacant, waiting for opportunities and that still belong to SHLD. Link to comment Share on other sites More sharing options...
Luke 532 Posted June 6, 2014 Share Posted June 6, 2014 Lampert unloads another 932,000 shares of AN (June 3rd - 5th). http://www.sec.gov/Archives/edgar/data/350698/000118143114023030/xslF345X03/rrd411140.xml Link to comment Share on other sites More sharing options...
merkhet Posted June 6, 2014 Share Posted June 6, 2014 Sorry, it should say "rent" and not "sell" in that sentence. You would have to sell @ 20 * $10.8 per square foot to get to the same valuation. Gotcha. That lease rate is about 25% less than what Lands End is paying for their Sears space right now. I'm guessing that the stores that contain Land's End are likely above average... In any case, I think that some stores probably would go for more than my back of the envelope calculation, and I would be surprised if ESL isn't seriously considering selling them. Link to comment Share on other sites More sharing options...
Luke 532 Posted June 6, 2014 Share Posted June 6, 2014 Lampert and Mulally meet... http://www.chicagotribune.com/classified/automotive/sns-rt-us-sears-holdings-ceo-mulally-exclusive-20140605,0,6547301.story Link to comment Share on other sites More sharing options...
Luke 532 Posted June 6, 2014 Share Posted June 6, 2014 These are always pre-dated. This one was posted this morning but has a June 4th date... SHC Speaks Blog: The Time is Now for eFairness http://blog.searsholdings.com/leadership-viewpoint/the-time-is-now-for-efairness/ Link to comment Share on other sites More sharing options...
Luke 532 Posted June 6, 2014 Share Posted June 6, 2014 Lampert and Mulally meet... http://www.chicagotribune.com/classified/automotive/sns-rt-us-sears-holdings-ceo-mulally-exclusive-20140605,0,6547301.story Just speculation, but here's an interesting quote from Mulally this morning on CNBC when asked if he is going to work at Sears (paraphrased) "I have loved serving 2 American icons in Boeing and Ford. When I retire I'm really going to think about where I serve next." Link to comment Share on other sites More sharing options...
tombgrt Posted June 6, 2014 Share Posted June 6, 2014 Lampert and Mulally meet... http://www.chicagotribune.com/classified/automotive/sns-rt-us-sears-holdings-ceo-mulally-exclusive-20140605,0,6547301.story Just speculation, but here's an interesting quote from Mulally this morning on CNBC when asked if he is going to work at Sears (paraphrased) "I have loved serving 2 American icons in Boeing and Ford. When I retire I'm really going to think about where I serve next." Only one thing to really conclude: Lampert needs help because he has no clue what he is doing? Link to comment Share on other sites More sharing options...
merkhet Posted June 6, 2014 Share Posted June 6, 2014 I would be thrilled if Mulally decided to join Sears in some capacity. I find it hard to imagine that he would take the spot though... Link to comment Share on other sites More sharing options...
ni-co Posted June 6, 2014 Share Posted June 6, 2014 I would be thrilled if Mulally decided to join Sears in some capacity. I find it hard to imagine that he would take the spot though... I agree. It would be a great if he joined SHLD's board – I can't see him as CEO at all. Neither can I imagine that Lampert wants him as CEO nor that Mulally would want to do it with Eddie Lampert sitting in his neck. Link to comment Share on other sites More sharing options...
enoch01 Posted June 6, 2014 Share Posted June 6, 2014 Anyone who is competent enough to take the job and execute a retail turnaround also is probably wise enough not to work for Lampert at a price Lampert would be willing to pay. Link to comment Share on other sites More sharing options...
BTShine Posted June 6, 2014 Share Posted June 6, 2014 Anyone who is competent enough to take the job and execute a retail turnaround also is probably wise enough not to work for Lampert at a price Lampert would be willing to pay. You never know. Many All-Star CEO's are already rich and choose to work because they enjoy the challenge and feeling of success. Link to comment Share on other sites More sharing options...
Faustus Posted June 6, 2014 Share Posted June 6, 2014 Lampert and Mulally meet... http://www.chicagotribune.com/classified/automotive/sns-rt-us-sears-holdings-ceo-mulally-exclusive-20140605,0,6547301.story Just speculation, but here's an interesting quote from Mulally this morning on CNBC when asked if he is going to work at Sears (paraphrased) "I have loved serving 2 American icons in Boeing and Ford. When I retire I'm really going to think about where I serve next." Only one thing to really conclude: Lampert needs help because he has no clue what he is doing? At Ford, Mulally proved himself to be a master of branding. This is an area Lampert needs to work on if he's serious about a retail turnaround. KMart, Sears, SYW, Kenmore, Craftsman, Diehard, Lands' End--your average consumer isn't going to sense the threads holding all of this together. It really starts to feel like a messy web, and all of the brands get polluted ('the flies don't get trapped' if you'd like to keep the web metaphor going). Link to comment Share on other sites More sharing options...
txlaw Posted June 6, 2014 Share Posted June 6, 2014 Check out the SHOS quarter. Ugly as sin. http://www.sec.gov/Archives/edgar/data/1548309/000154830914000020/exhibit991fiscal2014-q1.htm Link to comment Share on other sites More sharing options...
Luke 532 Posted June 6, 2014 Share Posted June 6, 2014 Sears' Lampert met Ford CEO about restructuring http://www.cnbc.com/id/101738075 We know, we've been discussing it the past 10-15 posts. Link to comment Share on other sites More sharing options...
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