SHLDQ - Sears Holdings Corp

[alpha asset strategies]

Am I the only one who has heard of Innovel?

 

Seems like they could break all this up into smaller niche retailing operations.

 

Locations with much smaller footprints could focus on appliances (samples only in stores) which get delivered through Innovel.

 

Craftsman stores operating as upscale Harbor Freights with a lawn & garden kicker (cash & carry tools, etc., with bulky sales items going through the Innovel channel.)

 

Scale up ecommerce & home delivery & leverage all that fancy data they collect...

 

Clothing; why bother?

 

There's one MAJOR problem:  SHLD doesn't even have money to pay it's bills!

 

How would they possibly fund such a major transformation?

[DooDiligence]

Am I the only one who has heard of Innovel?

 

Seems like they could break all this up into smaller niche retailing operations.

 

Locations with much smaller footprints could focus on appliances (samples only in stores) which get delivered through Innovel.

 

Craftsman stores operating as upscale Harbor Freights with a lawn & garden kicker (cash & carry tools, etc., with bulky sales items going through the Innovel channel.)

 

Scale up ecommerce & home delivery & leverage all that fancy data they collect...

 

Clothing; why bother?

 

There's one MAJOR problem:  SHLD doesn't even have money to pay it's bills!

 

How would they possibly fund such a major transformation?

 

Lampert's got deep pockets.

 

Maybe he could loan Sears $1B instead of just $400M...

[alpha asset strategies]

Not surprisingly, Lampert's most recent Letter of Credit facility has been collateralized "by certain real estate."  What is really left for the equity holders?  Lampert is not going to lose a dime on any of his loans; he's going to end up owning all of SHLD's valuable assets.

 

Any SHLD bull who actually thinks the assets are worth more than the liabilities should be praying for a bankruptcy filing ASAP.  Otherwise, the operating losses will continue to destroy asset value.  Does Lampert want to run SHLD's into the ground to the point where there will be absolutely no chance of an equity committee being given consideration in bankruptcy?  Lampert will be the largest secured and unsecured debt holder - he will absolutely control the bankruptcy process (and he is undeniably an expert in bankruptcy - just look at what he did during Kmart's bankruptcy.)  Billions in liabilities will be wiped clean, Lampert will pretty much own / control whatever assets remain.  Is there any value in that situation?  I don't know.......but that situation is a thousand times better than the SHLD's situation today.

 

Equity holders who are placing a bunch of faith in Lampert need to take a look at the big picture.

 

 

https://www.sec.gov/Archives/edgar/data/1310067/000119312516808224/d278379d8k.htm

[KJP]

Every investor has to understand what they have the knowledge, temperament, interest and time to do and tailor their investments accordingly.  For example, the research style and methods of someone who can spend 50+ hours per week on investing are not feasible for someone who has a day job and children, and thus their portfolios (and portfolio turnover) probably shouldn't look the same. 

 

Build your investment style around what you can do and want to do, rather than pablum from Buffett or the opinions of strangers on the internet.     

[peridotcapital]

Very early on in the Sears saga, I made a post over on one of the Fool boards regarding SHLD as a investment opportunity and a very knowledgable poster highlighted a fundamental *potential* problem at Kmart / Sears from an investor standpoint.  This trap I think may have been the trap Lampert fell into, and I see many of us (myself included) fall into from time to time.  It's related to Al's comment above about not being a "businessman".

 

Essentially, we look at businesses in oversimplified terms (often).  Generally, it's not a big deal, but sometimes it is.

 

Simple example, we see a business making "profit" of $X and *poorly* (re)investing $X back into the business, but the business is basically growing only 2-3% or maybe it's flatlined.... we see the $X as "profit" which is sustainable, and the $X investment leading to only 2-3% growth ("how stupid!" we say).

 

We non-operator investors think "oh, if only they would take that misallocated profit, and reinvest in the shares, or pay a dividend, or XYZ.... then this would be a cash cow".

 

The problem, is that when a company invest $X back into the business, you aren't ever sure if the $X is being misspent, or if it's actually really critical investment but the reason profits aren't growing is because the current profits are not sustainable.... without $X investment, maybe next year profits would be down 40%!

 

You see this mistake many times when folks here talk about energy companies - as energy companies can mis-estimate depletion, profits have finite lives, and many other factors make "profit" not necessarily what we think it is. 

 

$X "profit" is only an accounting value judgement of "sustainable" profit that can be extracted from a business at steady state with no more investment.  For some businesses this is simply not correct at all.  I think Lampert (and some of us) thought that more could be extracted from Sears, but most importantly, it wasn't clear what investments being seemingly misspent were actually critical to keep profits at their current level.  That investment was removed, and profits simply were eviscerated far more than any financial model would have predicted (I would argue that the profit drop was more than most bears would have guessed as well, at least from a 2006 vantage point).

 

This poster 10-12 years ago highlighted that it's never really possible to know and define maintenance vs. growth capex, and to some extent even managers don't know.

 

He was dead right.

 

I'm super glad I switched to the debt side of SHLD complex 8-9 years ago and I maintain it was always (not ex-post) a mistake for equity bulls given relative debt pricing.

 

Strangely, I think now the risk reward may favor equity over debt, but the entire situation is quite interesting on many levels.

 

Ben (still long debt)

 

Well said, Ben. I think that is exactly the issue Eddie never seemed to understand. And what's worse, after years of it coming unraveled, he has never changed his strategy. He still doesn't get it. For whatever reason he thinks his ROI on digital pricing signs is money well spent, when the real problem was not too many labor hours required to change out paper price tags, but rather not enough customers who had any reason to shop at a Sears when the shopping experience at a Macys or a Best Buy or a Target was so much better.

 

Chad (long '17 and '18 debt)

 

 

[giofranchi]

Gio, we were just responding to the poster who said it was a waste of time to look at this company and we should instead focus on wonderful businesses.   

 

Also you have a business so you look at this differently.  Someone who invests full time will have a different view on things and will have stronger views on the subject, partly bc their livelihood depends on it.  Just like you prob have strong views on your business.

 

I agree 100%.

 

Cheers,

 

Gio

[dyow]

I am more in line with dyow and Picasso's thinking on investing. If I were managing a billion dollars , I would totally shoot for a business with 30% appreciation potential and a 5% position. The problem is that I am only right 40-50% of time and with that strategy, I would be mostly even or maybe 10-15% over in a good year. Its an ok sum but doesn't move my needle.

 

So a 5% holding for a 30% gain makes me throw up at myself. Times 20 and that's a lot of puke on my face. Forget strangers, even my wife would not respect me for that . I would be better off owning a pawn shop a much better risk-reward from loss of prestige and ROI perspective.

 

Warren Buffet has spouted so much of investment wisdom, you can't even have a strategy based on that. He is a Nostradamus of investing, the true believers will credit him for all the investing success while the failures are the wrong interpretation of his prophecies. Glad I didn't use my punch card a decade ago when I was his disciple. I would have had Fannie/Freddie and 2000 pages of posts on this board.

 

So I am happy with turning over my investments at the drop of a hat, look for multi baggers and completely blowing up in the process. At least I'll have an interesting story for my grandkids.

 

+1.  I mentioned this before in another thread but i believe a lot of investing style is based on your personality, and it is hard to change that.  Some people are scared of shitty companies, and gravitate towards growth companies, i gravitate towards shitty, and am scared of growth companies.

 

   

 

 

[walt373]

Ben and Chad, since both of you are long the debt, could you please explain to me why? I have been puzzled by the fact that they are trading at ~95c on the dollar, considering how poorly the business is doing and the stock keeps falling but the debt is pretty stable. First, what's the upside to own debt in this case - or is the risk really that low? Second, does debt trading that high imply there should be a lot of value left for the equity? Or are the bonds and stock saying two different things?

[BargainValueHunter]

Not surprisingly, Lampert's most recent Letter of Credit facility has been collateralized "by certain real estate."  What is really left for the equity holders?  Lampert is not going to lose a dime on any of his loans; he's going to end up owning all of SHLD's valuable assets.

 

Any SHLD bull who actually thinks the assets are worth more than the liabilities should be praying for a bankruptcy filing ASAP.  Otherwise, the operating losses will continue to destroy asset value.  Does Lampert want to run SHLD's into the ground to the point where there will be absolutely no chance of an equity committee being given consideration in bankruptcy?  Lampert will be the largest secured and unsecured debt holder - he will absolutely control the bankruptcy process (and he is undeniably an expert in bankruptcy - just look at what he did during Kmart's bankruptcy.)  Billions in liabilities will be wiped clean, Lampert will pretty much own / control whatever assets remain.  Is there any value in that situation?  I don't know.......but that situation is a thousand times better than the SHLD's situation today.

 

Equity holders who are placing a bunch of faith in Lampert need to take a look at the big picture.

 

 

https://www.sec.gov/Archives/edgar/data/1310067/000119312516808224/d278379d8k.htm

Lampert cares not about equity holders (other than himself). I've seen no evidence to say otherwise. Biglari II. I think Lampert has been building a fort around his Sears investments since KCD with an invisible middle finger to the little guy who trusted his leadership and bought in.

 

I'd love to ask Bruce Berkowitz why he didn't just stick with owning the debt since at least 2011.

[peridotcapital]

Ben and Chad, since both of you are long the debt, could you please explain to me why? I have been puzzled by the fact that they are trading at ~95c on the dollar, considering how poorly the business is doing and the stock keeps falling but the debt is pretty stable. First, what's the upside to own debt in this case - or is the risk really that low? Second, does debt trading that high imply there should be a lot of value left for the equity? Or are the bonds and stock saying two different things?

 

Over the last several years there have been excellent times to buy the debt during periods of weakness. Not at 95 cents (that price is a more recent occurrence, fairly common since the 2018 tender offer was made with the SRG proceeds), but at 70-85 cents. To me it was pretty clear that as long as Eddie continued down the retail path, most of the NAV from the real estate, brands, etc would be offset by retail losses. After a while it just became clear that he is not going to wake up one day and say enough is enough. Why else would he be backstopping it himself?

 

From that vantage point, I could never see the equity being worth, say, $5 billion (the bulls liked it at $20 because they thought Bruce might only be 67% off in his value assessment and therefore maybe they could get $50/share). But at the same time I thought Eddie would still be playing this game in 2017 and 2018 so those debt securities would be paid out at par. I never went past 2018 because adding too many more years to the timeline makes the picture more cloudy.

 

But Eddie keeps going. Now he owns a bunch of the 2019 debt (between he and Bruce they hold $550M) and the credit lines go out to 2020. Also, keep in mind that the total principal amount of the 2017/2018 notes is less than $350 million. After everything he has done over the last 12 months, is he going to get to Q4 2017 with less than $50 million of SRAC debt coming due and decide that it makes sense to bankrupt a subsidiary over such a small amount of money? Would the negative press alone not hurt SHLD by more than $50 million? If that was his plan, why not file already? Why keep burning billions of dollars?

 

Quite simply, it sure looked like the debt had less risk than the equity but was poised for higher returns. So far that has played out.

 

As far as what the bond prices say about the equity value, it's two completely different animals. The declining equity reflects the ever-declining NAV. The rising debt prices are based on the idea that there is still plenty of unencumbered real estate and Eddie has at least a few more years left of shuffling the deck chairs.

[benhacker]

Walt,

 

In addition to the fundamental "NAV" thesis of Sears.  I would echo some of Chad's comments.

 

However, my debt ownership goes back to 2008.  I purchased SSRAP, '13's / '17's (IIRC) during that time.  All around 25-35% of par.  Today I own only the SSRAP (which is effectively the 2032 SRAC issue wrapped in a trust).

 

I guess I would summarize the thesis (my position isn't liquid, so don't think of this as a hearty endorsement, I think my initial purchases have paid back cost + some already) of owning SSRAP thusly.

 

If you think (using Chad's logic) that Sears survives to 2020, SSRAP is putting you into the '32 debt today at <40% of par, and at a current yield of over 18%.  So your cost is getting paid back via coupons pretty quickly, and you are also exposed to some positive catalysts (essentially any post Ch7/11 restructuring).  You are clearly at risk of the lead equity / control investor hollowing you out view some tricky activities, but I think following ESLs actions, I don't see equity being advantaged greatly at the expense of debt (it keeps getting repeated ad nauseum, but I do not think an unbiased observer would via his actions as trying to "screw" debt holders... given he's been buying equity, funding the company, and paying coupons for 10 years since folks have been saying this...)... I do see many fundamental issues / challenges, but they kill both debt / equity, and only some small fringe cases where equity wins vs. debt, but in those cases, equity is hollowed out anyway.

 

The interesting thing about SSRAP is that it trades 20+% cheap to '32 underlying, so if I get a few coupons and Sears goes teets up, and there is a restructuring, perhaps SRAC gets a bone and post BK pricing of '32 notes (which SSRAP would have to liquidate) may be >$0.

 

All of the above is rambling, but if I were to distill out the thesis for SSRAP specifically, it would be:

1) High SHLD "NAV" & equity ownership provide high comfort of SHLD paying coupons for another 24-36 months at least (yes, nothing is guaranteed, but I would discount those coupon cash flows at a much lower rate than SHLD's marginal WACC or something).

2) ownership structure of debt and equity favor losses at retail being curtailed better than recent history suggests

3) In the case of out year BK, recovery would be minimal, but >$0 for SSRAP

4) SSRAP backs into SRAC '32 obligations at high yield (7.25% vs. 7%) and 20% lower price

5) I believe SRAC debt is structurally senior (barely) to '19 holdco debt (many comments on this over the years, some disagree)

 

Hope that helps.  My comment early about debt vs. equity risk / reward perhaps changing, is really that now SHLD common is priced more like an "option" (as it should be) and thus the upside is more interesting than it has been historically (all my opinion).  Back in '08 / '09, you could literally buy SRAC obligations at 20-30% current yields, and SHLD common had an equity cap of like $5-10B... it was bonkers.

 

Related topic to anyone out there:

 

For those betting on SHLD filing soon, I'm curious how you are expressing this view / investing for this event?  puts?  Short common (paying the borrow)?  Short the '17's?  Short '18's or '19's or something else?

[walt373]

Lots to think about here. Thank you very much for the explanations.

[HalfMeasure]

Very early on in the Sears saga, I made a post over on one of the Fool boards regarding SHLD as a investment opportunity and a very knowledgable poster highlighted a fundamental *potential* problem at Kmart / Sears from an investor standpoint.  This trap I think may have been the trap Lampert fell into, and I see many of us (myself included) fall into from time to time.  It's related to Al's comment above about not being a "businessman".

 

Essentially, we look at businesses in oversimplified terms (often).  Generally, it's not a big deal, but sometimes it is.

 

Simple example, we see a business making "profit" of $X and *poorly* (re)investing $X back into the business, but the business is basically growing only 2-3% or maybe it's flatlined.... we see the $X as "profit" which is sustainable, and the $X investment leading to only 2-3% growth ("how stupid!" we say).

 

We non-operator investors think "oh, if only they would take that misallocated profit, and reinvest in the shares, or pay a dividend, or XYZ.... then this would be a cash cow".

 

The problem, is that when a company invest $X back into the business, you aren't ever sure if the $X is being misspent, or if it's actually really critical investment but the reason profits aren't growing is because the current profits are not sustainable.... without $X investment, maybe next year profits would be down 40%!

 

You see this mistake many times when folks here talk about energy companies - as energy companies can mis-estimate depletion, profits have finite lives, and many other factors make "profit" not necessarily what we think it is. 

 

$X "profit" is only an accounting value judgement of "sustainable" profit that can be extracted from a business at steady state with no more investment.  For some businesses this is simply not correct at all.  I think Lampert (and some of us) thought that more could be extracted from Sears, but most importantly, it wasn't clear what investments being seemingly misspent were actually critical to keep profits at their current level.  That investment was removed, and profits simply were eviscerated far more than any financial model would have predicted (I would argue that the profit drop was more than most bears would have guessed as well, at least from a 2006 vantage point).

 

This poster 10-12 years ago highlighted that it's never really possible to know and define maintenance vs. growth capex, and to some extent even managers don't know.

 

He was dead right.

 

I'm super glad I switched to the debt side of SHLD complex 8-9 years ago and I maintain it was always (not ex-post) a mistake for equity bulls given relative debt pricing.

 

Strangely, I think now the risk reward may favor equity over debt, but the entire situation is quite interesting on many levels.

 

Ben (still long debt)

 

Hey Ben, do you mind elaborating on why you're starting to think the risk/reward is starting to favor equity? Would be interesting to hear your perspective.

[benhacker]

Hey Ben, do you mind elaborating on why you're starting to think the risk/reward is starting to favor equity? Would be interesting to hear your perspective.

 

I will re-word what I said above, but I don't have much more to elaborate on.

 

Fundamentally, debt for years (at least a decade) has seemed superior to me for a simple reason... you could get debt at YTMs above 10% (sometimes higher than 40%) while the equity capitalization (as a % of enterprise value) was massive.  You now are in a situation where equity cap as a % of enterprise value is maybe only 20%.

 

This basically means SHLD is now a stub.  *if* you think there is a lot of value in RE, then the equity offers levered upside, and the debt probably offers similar wipeout risk (which is real, Sears is clearly very sick).

 

I guess said differently, (again, if you feel there is upside to hard assets at SHLD), SHLD common finally offers big upside compared to the upside offered from Sears debt (low teens YTMs across most classes).

 

That's it... it's just a capital structure pricing comment.

 

To me, if a company has debt which pays 13-15%, there is really no way you would ever invest in the common, unless the common has some highly leveraged traits which would in the bull case potentially generate extremely high returns (because, fundamentally, equity is "riskier" than debt)... Now, I think in the bull case equity does >>15% annual returns for some period... and the downside case equity probably gets something similar to debt... so for equity buyers, it's finally interesting relative to debt. 

 

Maybe I'm not explaining myself, but basically if you buy equity in Sears you have to:

1) Believe the return will be higher than the YTM of the debt

and/or

2) Believe the equity can do well while debt doesn't

 

I own no equity FYI... just SSRAP.

[HalfMeasure]

Ah okay - so a case of the market cap shrinking enough that there might finally be outsized upside in the equity - more that price has changed the risk/reward dynamics than anything underlying in the business. I think the hardest thing to get comfortable with in the equity is whether the NAV is realized faster than the NAV deteriorates. Given how drawn out the process has already been, I'm trying to read the tea leaves and estimate a timeline.

[ScottHall]

Walt,

 

In addition to the fundamental "NAV" thesis of Sears.  I would echo some of Chad's comments.

 

However, my debt ownership goes back to 2008.  I purchased SSRAP, '13's / '17's (IIRC) during that time.  All around 25-35% of par.  Today I own only the SSRAP (which is effectively the 2032 SRAC issue wrapped in a trust).

 

I guess I would summarize the thesis (my position isn't liquid, so don't think of this as a hearty endorsement, I think my initial purchases have paid back cost + some already) of owning SSRAP thusly.

 

If you think (using Chad's logic) that Sears survives to 2020, SSRAP is putting you into the '32 debt today at <40% of par, and at a current yield of over 18%.  So your cost is getting paid back via coupons pretty quickly, and you are also exposed to some positive catalysts (essentially any post Ch7/11 restructuring). You are clearly at risk of the lead equity / control investor hollowing you out view some tricky activities, but I think following ESLs actions, I don't see equity being advantaged greatly at the expense of debt (it keeps getting repeated ad nauseum, but I do not think an unbiased observer would via his actions as trying to "screw" debt holders... given he's been buying equity, funding the company, and paying coupons for 10 years since folks have been saying this...)... I do see many fundamental issues / challenges, but they kill both debt / equity, and only some small fringe cases where equity wins vs. debt, but in those cases, equity is hollowed out anyway.

 

The interesting thing about SSRAP is that it trades 20+% cheap to '32 underlying, so if I get a few coupons and Sears goes teets up, and there is a restructuring, perhaps SRAC gets a bone and post BK pricing of '32 notes (which SSRAP would have to liquidate) may be >$0.

 

All of the above is rambling, but if I were to distill out the thesis for SSRAP specifically, it would be:

1) High SHLD "NAV" & equity ownership provide high comfort of SHLD paying coupons for another 24-36 months at least (yes, nothing is guaranteed, but I would discount those coupon cash flows at a much lower rate than SHLD's marginal WACC or something).

2) ownership structure of debt and equity favor losses at retail being curtailed better than recent history suggests

3) In the case of out year BK, recovery would be minimal, but >$0 for SSRAP

4) SSRAP backs into SRAC '32 obligations at high yield (7.25% vs. 7%) and 20% lower price

5) I believe SRAC debt is structurally senior (barely) to '19 holdco debt (many comments on this over the years, some disagree)

 

Hope that helps.  My comment early about debt vs. equity risk / reward perhaps changing, is really that now SHLD common is priced more like an "option" (as it should be) and thus the upside is more interesting than it has been historically (all my opinion).  Back in '08 / '09, you could literally buy SRAC obligations at 20-30% current yields, and SHLD common had an equity cap of like $5-10B... it was bonkers.

 

Related topic to anyone out there:

 

For those betting on SHLD filing soon, I'm curious how you are expressing this view / investing for this event?  puts?  Short common (paying the borrow)?  Short the '17's?  Short '18's or '19's or something else?

 

I don't like the SSRAPs as a BK play specifically because of the liquidation provision. If Sears defaults or declares BK the trust becomes a forced seller of the '32s. Would be more interested to be the counterparty in that situation... these things are illiquid and the price may crater more than it should afterwards.

 

https://www.sec.gov/Archives/edgar/data/1071246/0000903423-03-000069.txt

[benhacker]

I don't like the SSRAPs as a BK play specifically because of the liquidation provision. If Sears defaults or declares BK the trust becomes a forced seller of the '32s. Would be more interested to be the counterparty in that situation... these things are illiquid and the price may crater more than it should afterwards.

 

Agree 100%.

 

If you expect BK, I think SSRAP (or SRAC underlying) are bad.  You would want to be a buyer post filing if you are playing a BK.

 

I was only noting that SSRAP trades >20% cheap to SRAC, so you are getting paid for at least that level of puke on a CH 11 filing, and I think the trust probably gets >$0 in a liquidation.

 

Agree that SSRAP gets smoked on that sale, just trying to describe what I feel like is the downside everyone is looking at.

[InelegantInvestor]

Sears sells Craftsman, will get $525 million upfront,continuing payments http://finance.yahoo.com/news/stanley-black-decker-reaches-agreement-123400693.html

 

Eddie selling anything that isn't bolted down.

[Ballinvarosig Investors]

Total sum is purported at $900M - assuming that some sort of earn-out clause must exist to get to this sum.

 

http://www.foxbusiness.com/markets/2017/01/05/stanley-black-decker-to-buy-craftsman-brand-from-sears.html

[InelegantInvestor]

$250MM payment at end of year 3, and % of sales that changes over time. $900MM is present value of package. It's buried at the bottom of the press release:

Stanley Black & Decker will pay Sears Holdings $525 million at closing, $250 million at end of year three, and annual payments on new Stanley Black & Decker Craftsman sales through year 15 (2.5% through 2020, 3% through January 2023, and 3.5% thereafter).  The net present value of all these cash payments is approximately $900 million.  The license granted to Sears Holdings will be royalty-free for 15 years, then 3% thereafter.   

 

Existing sales of Craftsman products outside the Sears Holdings and Sears Hometown distribution channels, which will be assumed immediately upon closing by Stanley Black & Decker, were approximately $200 million over the last 12 months.  The company expects the sale of Craftsman branded products to contribute approximately $100 million of average annual revenue growth for approximately the next ten years.  The transaction is expected to be accretive to earnings by approximately $0.10-$0.15 per share in year one, increasing to approximately $0.35-$0.45 by year five and to approximately $0.70-$0.80 by year ten, excluding approximately $20 million of deal-related costs.

[HalfMeasure]

Anyone have a good feel for how Craftsman compares to Kenmore/Diehard as a brand? Wondering if this gives some lookthrough into the value of other brands

[Ballinvarosig Investors]

$250MM payment at end of year 3, and % of sales that changes over time. $900MM is present value of package. It's buried at the bottom of the press release:

Stanley Black & Decker will pay Sears Holdings $525 million at closing, $250 million at end of year three, and annual payments on new Stanley Black & Decker Craftsman sales through year 15 (2.5% through 2020, 3% through January 2023, and 3.5% thereafter).  The net present value of all these cash payments is approximately $900 million.  The license granted to Sears Holdings will be royalty-free for 15 years, then 3% thereafter.   

 

Existing sales of Craftsman products outside the Sears Holdings and Sears Hometown distribution channels, which will be assumed immediately upon closing by Stanley Black & Decker, were approximately $200 million over the last 12 months.  The company expects the sale of Craftsman branded products to contribute approximately $100 million of average annual revenue growth for approximately the next ten years.  The transaction is expected to be accretive to earnings by approximately $0.10-$0.15 per share in year one, increasing to approximately $0.35-$0.45 by year five and to approximately $0.70-$0.80 by year ten, excluding approximately $20 million of deal-related costs.

Eddie Lampert must feel that Sears Holdings is going to live on if he's looking for royalty payments for Craftsman well into the future.

[InelegantInvestor]

More from Sears this morning. Closing more stores. Q4 Same Store Sales abysmal,  down 12-13% so far.

http://finance.yahoo.com/news/sears-holdings-announces-steps-enhance-142000828.html

[tede02]

Anyone have a good feel for how Craftsman compares to Kenmore/Diehard as a brand? Wondering if this gives some lookthrough into the value of other brands

 

This Fortune article says that appliance sales at Sears were $4b recently.  Not sure if this is Kenmore exclusively or includes other brands:

 

http://fortune.com/2016/05/26/sears-craftsman-kenmore-diehard/

 

I have to imagine that Kenmore sales were significantly more than Craftsman.  I haven't done any analysis but perhaps there is significant asset value between the remaining brands and company owned real estate. 

 

One thing I've noticed with myself, and perhaps this is true for the entire market, is the ongoing demise of the retail operation really anchors my view.  When you drive by a Sears or K-Mart, you can't help but just shake your head.  The psychology of that makes it really hard to see value, even if it is truly there. 

[HalfMeasure]

Anyone have a good feel for how Craftsman compares to Kenmore/Diehard as a brand? Wondering if this gives some lookthrough into the value of other brands

 

This Fortune article says that appliance sales at Sears were $4b recently.  Not sure if this is Kenmore exclusively or includes other brands:

 

http://fortune.com/2016/05/26/sears-craftsman-kenmore-diehard/

 

I have to imagine that Kenmore sales were significantly more than Craftsman.  I haven't done any analysis but perhaps there is significant asset value between the remaining brands and company owned real estate. 

 

One thing I've noticed with myself, and perhaps this is true for the entire market, is the ongoing demise of the retail operation really anchors my view.  When you drive by a Sears or K-Mart, you can't help but just shake your head.  The psychology of that makes it really hard to see value, even if it is truly there.

 

Agreed. It's also disconcerting that even if you believe the NAV thesis, time isn't your friend in this case.