SHLDQ - Sears Holdings Corp

[ERICOPOLY]

And no, this can't be explained away with a hand wave about 3rd party sellers.

 

Try to search on "LEGO Briefs".

 

You'll get a result priced as "$18.00 $12.60".

 

Click on it and it's back to "$18.00".

 

It's available from seller...  You guessed it...  Sears.com.

 

Now add it to your cart.  Those generous people knock the price down to "$16.20" at this point. (not to be confused with $12.60, the originally listed sale price)

 

The cart says it's "sold by Sears and fulfilled by Sears".

 

What an interesting experience!

[cubsfan]

lol Eric, you seem to be really agitated after selling your position... :P

 

Hell hath no fury like a ShopYourWay customer scorned.

 

I spent another 5 minutes today on a different search.  This time Surf Boards.  About the fourth item I clicked on did the old price switch trick on me again.

 

Search on "Atom Softtop Surfboard".

 

The first item is blue.  Price listed is "$226.78 $192.77".

 

After clicking on it the price discount goes away.  It's back at $226.78".

 

You know this kind of thing might really be destroying their quarterly numbers.  It could be worthwhile to monitor that website for signs of getting this kind of thing fixed. 

 

Would you believe that the only two types of items I've bothered to search on have all this bad price data going on?  Well, it's true.  Based on this, why would I be interested in continuing to shop with them?

 

This is his entire strategy -- it's kind of important to make it work.

 

 

 

Me thinks SHLD needs to hire Melissa Mayer - "it's all about the user experience"

 

http://www.businessinsider.com/marissa-mayer-biography-2013-8#!

 

(warning - this article is long, but made for a fascinating Saturday night read)

[constructive]

This is his entire strategy -- it's kind of important to make it work.

 

Well, although he claims that SYW and online shopping are the core of the strategy, you have to keep in mind that online is only ~2% of sales. Most customers are probably not aware of the websites, and even most SYW members have probably not used the websites.

[ERICOPOLY]

Just tried it with the blue surf board...it's unbelievable.  :o

 

The white one keeps the sales price though??  :o

 

Don't worry, the black one, the next one over, actually drops in price by 63 cents when clicked on it.

 

Their databases must be a total mess.

[ERICOPOLY]

This is his entire strategy -- it's kind of important to make it work.

 

Well, although he claims that SYW and online shopping are the core of the strategy, you have to keep in mind that online is only ~2% of sales. Most customers are probably not aware of the websites, and even most SYW members have probably not used the websites.

 

 

That's "integrated retail", but when you open Eddie's letter to shareholders, it's back to "integrated retail".

 

Sorry for the joke  ;D

[alertmeipp]

Just tried it with the blue surf board...it's unbelievable.  :o

 

The white one keeps the sales price though??  :o

 

Don't worry, the black one, the next one over, actually drops in price by 63 cents when clicked on it.

 

Their databases must be a total mess.

 

Maybe that's part of their promotion tactics. Real-time Integrated Pricing. RIP in short.  ;D

[ERICOPOLY]

Search on "Hammer".  Each of the first 6 items listed are on sale, but the sale prices aren't known to the shopper until after they've been clicked on.  These are all "Craftsmen" items.  The bread and butter of Sears sales.  Or perhaps, one of the crown jewels if not the bread and butter.

 

They've got them at full price in the store window, but then lower the prices after you enter the store.  This is truly reverse psychology!

 

Now, if you go back to the last earnings call transcript you'll note that management says mistakes were made in doubling down some of the promotional pricing.

 

Could it be related to database issues we are seeing here?  Perhaps, they don't have control because their back end systems are so badly F'ed up?

 

It gives quite a bit of hope actually... if it's something technological that's driving the margins lower (something as basic as lack of control over promotional pricing), it can be fixed.    But when?

[ERICOPOLY]

This is his entire strategy -- it's kind of important to make it work.

 

Well, although he claims that SYW and online shopping are the core of the strategy, you have to keep in mind that online is only ~2% of sales. Most customers are probably not aware of the websites, and even most SYW members have probably not used the websites.

 

Getting the technology wrong spills over to the brick-and-mortar customer experience:

 

Employees said they like the iPads in theory but have trouble with them in practice. One challenge has been getting Sears' antiquated systems to communicate with the devices, which can lead to frustrating moments when customers and staff are waiting for information, current and former employees said.

 

That is a particular challenge for appliance sales staff, who rely on the devices to look up product specs. One appliance associate said he has a "love hate" relationship with his iPad. He's supposed to ring up customer purchases on the device, but he often uses the register instead because it is quicker.

 

http://online.wsj.com/article/SB10001424127887323665504579028371672070930.html?KEYWORDS=Sears

[alertmeipp]

Search on "Hammer".  Each of the first 6 items listed are on sale, but the sale prices aren't known to the shopper until after they've been clicked on.  These are all "Craftsmen" items.  The bread and butter of Sears sales.

 

They've got them at full price in the store window, but then lower the prices after you enter the store.  This is truly reverse psychology!

 

Now, if you go back to the last earnings call transcript you'll note that management says mistakes were made in doubling down some of the promotional pricing.

 

Could it be related to database issues we are seeing here?  Perhaps, they don't have control because their back end systems are so badly F'ed up?

 

It gives quite a bit of hope actually... if it's something technological that's driving the margins lower (something as basic as lack of control over promotional pricing), it can be fixed.    But when?

 

Add to the Cart to see the final price is common, no?

[ERICOPOLY]

Search on "Hammer".  Each of the first 6 items listed are on sale, but the sale prices aren't known to the shopper until after they've been clicked on.  These are all "Craftsmen" items.  The bread and butter of Sears sales.

 

They've got them at full price in the store window, but then lower the prices after you enter the store.  This is truly reverse psychology!

 

Now, if you go back to the last earnings call transcript you'll note that management says mistakes were made in doubling down some of the promotional pricing.

 

Could it be related to database issues we are seeing here?  Perhaps, they don't have control because their back end systems are so badly F'ed up?

 

It gives quite a bit of hope actually... if it's something technological that's driving the margins lower (something as basic as lack of control over promotional pricing), it can be fixed.    But when?

 

Add to the Cart to see the final price is common, no?

 

It's not in the cart yet. 

 

I encourage you to go to ShopYourWay.com.  Search on "Hammer".

 

Then it displays the results with prices.

 

At this point you say "TOO HIGH" and walk away from the store window.

 

Now, instead you like the item so you click on it.  Then they lower the price for you.    Still not in the cart.

[jay21]

How many mistakes have Eddie made during his tenure at SHLD?

I think the biggest ones:

1. Spent too much cash to buy back shares at $100+ price. Now stock is under $40 and he has no more money to buyback the shares?

 

I don't really want to get in this SHLD crossfire, but I think this logic in general is flawed.  People point out what the stock is now in relation to the buyback price.  You should judge actions based upon the facts known when the decision was made.  Future unknowable events do not determine if the decision was good or bad. 

 

If when the stock was bought back, the value was over $200, then it was a good decision.

[ERICOPOLY]

If when the stock was bought back, the value was over $200, then it was a good decision.

 

Not if it left them short of cash and needing to sell properties/assets that they didn't want to let go of. 

 

Eddie has commented that they didn't want to sell some of what they sold.

 

You should only return to shareholders cash that isn't needed by the business.  It clearly was needed, given Eddie's comments.  Thus, a mistake.

[txlaw]

Another thing that's sad about SYW is that SHLD is actually touting its big data retail ability through its Metascale subsidiary:

See http://adage.com/article/dataworks/sears-data-services-game/240635/

and, generally,

http://www.metascale.com

 

If I were a potential Metascale customer, and I saw SYW, I'd be like . . . really?  No thanks. 

 

More on SYW:

http://adage.com/article/cmo-strategy/sears-holdings-loyalty-program-helping-hurting/243796/

 

Chris Braithwaite on SWY, from that article above:

"Shop Your Way is at the core of everything we're doing," Mr. Brathwaite said. "We're focused on our most loyal customers, and building relationships with them is something that will drive our company to profitability."

 

Then they better get their act together! 

 

But I agree with this guy:

http://adage.com/article/al-ries/bet-sears-ditch-softer-side/232678/

[txlaw]

Btw, those who say investing in SHLD is speculating are confusing the difference between risk and uncertainty. 

 

Further, they clearly haven't done any analysis to determine what the potential payoff is in relation to the opportunity cost. 

[constructive]

Add to the Cart to see the final price is common, no?

 

Amazon does this because the manufacturer won't allow them to advertise a lower sales price. That shouldn't be a problem for KCD products at Sears!

[jay21]

If when the stock was bought back, the value was over $200, then it was a good decision.

 

Not if it left them short of cash and needing to sell properties/assets that they didn't want to let go of. 

 

Eddie has commented that they didn't want to sell some of what they sold.

 

You should only return to shareholders cash that isn't needed by the business.  It clearly was needed, given Eddie's comments.  Thus, a mistake.

 

Good point and I agree.

 

I was trying to discuss buybacks in general.  I see that type of logic a lot and I strongly disagree with it.

[ERICOPOLY]

Btw, those who say investing in SHLD is speculating are confusing the difference between risk and uncertainty. 

 

Further, they clearly haven't done any analysis to determine what the potential payoff is in relation to the opportunity cost.

 

I hear what you are saying.  BTW, I wrote some September puts on Friday despite selling my common on Thursday.  Part of this is "make it back" syndrome, and part of it is my original thesis that the stock is very low relative to the asset values that haven't moved over the past few months.  All that's changed is perceptions over what will be done and when.  And of course, the lower stock price alters psychology as well.

 

I know they suck at SYW, but I know it can be fixed.  I don't know if they can fix it, but I know it can be fixed.  Something tells me it's going to be a huge fix, because these problems I'm seeing with "shifting sands pricing" are obvious and yet they took the website live with these problems.  I don't expect a patch by Monday.

[jeffmori7]

Eric, maybe you should write them, no? It's important they have feedback from customers, so I think they would appreciate if you relate your shopping experience! And it would be good for stockholders too!

[ERICOPOLY]

Add to the Cart to see the final price is common, no?

 

Amazon does this because the manufacturer won't allow them to advertise a lower sales price. That shouldn't be a problem for KCD products at Sears!

 

Unless they have an agreement with the resellers (like Costco and TrueValueHardware) that prevents them from having sales that undercut the pricing of the resellers.

[constructive]

Add to the Cart to see the final price is common, no?

 

Amazon does this because the manufacturer won't allow them to advertise a lower sales price. That shouldn't be a problem for KCD products at Sears!

 

Unless they have an agreement with the resellers (like Costco and TrueValueHardware) that prevents them from having sales that undercut the pricing of the resellers.

 

Sure, there might be conflicts between KCD and SHLD. But they only exist because Eddie wants to play Battlin' Business Units. KCD should be run to maximize the value of SHLD, not to maximize its own value.

[txlaw]

Btw, those who say investing in SHLD is speculating are confusing the difference between risk and uncertainty. 

 

Further, they clearly haven't done any analysis to determine what the potential payoff is in relation to the opportunity cost.

 

I hear what you are saying.  BTW, I wrote some September puts on Friday despite selling my common on Thursday.  Part of this is "make it back" syndrome, and part of it is my original thesis that the stock is very low relative to the asset values that haven't moved over the past few months.  All that's changed is perceptions over what will be done and when.  And of course, the lower stock price alters psychology as well.

 

I know they suck at SYW, but I know it can be fixed.  I don't know if they can fix it, but I know it can be fixed.  Something tells me it's going to be a huge fix, because these problems I'm seeing with "shifting sands pricing" are obvious and yet they took the website live with these problems.  I don't expect a patch by Monday.

 

Hey, I know that you get it.  It's the other folks I'm trying to persuade.  ;D

 

I liked your post, btw, on your own mentality and how that tends to affect what type of companies you invest in. 

 

Not to pick on any particular board members (thus, I won't mention any names), but I distinctly recall some folks who were very "bullish" on SHLD  who almost did a 180 after the share price tanked down to around $25.  In fact, I remember someone commenting that they sold a large part of their position at that time, when there was, in fact, the most MOS.  And then they missed a short squeeze -- not that that's particularly important to the SHLD thesis.

 

Emotion runs high with SHLD, especially amongst the SHLD lovers scorned.  It reminds me a lot of my RIM/BBRY investment. 

[ERICOPOLY]

Add to the Cart to see the final price is common, no?

 

Amazon does this because the manufacturer won't allow them to advertise a lower sales price. That shouldn't be a problem for KCD products at Sears!

 

Unless they have an agreement with the resellers (like Costco and TrueValueHardware) that prevents them from having sales that undercut the pricing of the resellers.

 

Sure, there might be conflicts between KCD and SHLD. But they only exist because Eddie wants to play Battlin' Business Units. KCD should be run to maximize the value of SHLD, not to maximize its own value.

 

Or we might just be trying to give them an excuse for the pricing flubs.  Perhaps this is just bad back end systems after all.

 

I searched on "Craftsman" and got a lot of items that are displayed at deep discounts.

 

Like this one:

 

Craftsman 255 pc. Mechanics Tool Set with Lift Top Storage Chest

 

That item is listed at "$299.99 $179.99".

 

Click on it, and the price goes up to "$299.99 $269.99".

 

So they raise the price by $90 on you!

 

 

[ERICOPOLY]

Btw, those who say investing in SHLD is speculating are confusing the difference between risk and uncertainty. 

 

Further, they clearly haven't done any analysis to determine what the potential payoff is in relation to the opportunity cost.

 

I hear what you are saying.  BTW, I wrote some September puts on Friday despite selling my common on Thursday.  Part of this is "make it back" syndrome, and part of it is my original thesis that the stock is very low relative to the asset values that haven't moved over the past few months.  All that's changed is perceptions over what will be done and when.  And of course, the lower stock price alters psychology as well.

 

I know they suck at SYW, but I know it can be fixed.  I don't know if they can fix it, but I know it can be fixed.  Something tells me it's going to be a huge fix, because these problems I'm seeing with "shifting sands pricing" are obvious and yet they took the website live with these problems.  I don't expect a patch by Monday.

 

Hey, I know that you get it.  It's the other folks I'm trying to persuade.  ;D

 

I liked your post, btw, on your own mentality and how that tends to affect what type of companies you invest in. 

 

Not to pick on any particular board members (thus, I won't mention any names), but I distinctly recall some folks who were very "bullish" on SHLD  who almost did a 180 after the share price tanked down to around $25.  In fact, I remember someone commenting that they sold a large part of their position at that time, when there was, in fact, the most MOS.  And then they missed a short squeeze -- not that that's particularly important to the SHLD thesis.

 

Emotion runs high with SHLD, especially amongst the SHLD lovers scorned.  It reminds me a lot of my RIM/BBRY investment.

 

There is certainly a different amount of emotional control you need to master for these kinds of uncertainty plays.

 

I wonder if we could start a training program for portfolio managers.  The big firms like Fidelity could pay us a fee to send their portfolio managers to our camp.  We would then send them back the scores.

 

We would simply water-board the people, see how they react.  Score them on this.

 

It's like the BUDS training for the Navy Seals.  They have one exam where the candidates have to get into the pool with their feet tied together at the ankles and their wrists tied behind their backs.  They then have to do laps in the pool by bouncing off the bottom with their feet, and then taking a breath at the surface, and then bound off the bottom again, then take another breath, etc... etc...

 

It's about emotional control.  Those who panic get given a second or third try.  If they still can't control their emotions, they are bounced from the program.

 

The SEALS know that it's important to identify people who can't be calm under stress.  They get rid of those candidates before the bullets are flying.  Maybe in money management that would be a good thing too.

[ERICOPOLY]

As for that search on this item:  Craftsman 255 pc. Mechanics Tool Set with Lift Top Storage Chest

 

Perhaps the most concerning is that three identical search results are found.

 

The first result is the discounted one, where the discounted price goes up by $90 after you click on it.

 

The second result is the undiscounted $299 price.  Exactly the same item.

 

The third result claims it's "out of stock" (but claims the old price is actually $349.40).

 

Now how's that for a database, huh?

 

 

More on that second search result, the one for the undiscounted $299 price.  Go ahead and click on it.  They don't let you add it to your cart at ShopYourWay.  Instead, they make you go to the Craftsman website to complete the sale.

 

So let me get this straight.  They have a strategy of trying to get everyone on to the shopyourway website, but then redirect you over to Craftsman's website in order to complete the transaction?  How bizarre is that???  Then I have to enter all my shipping info because I don't have a Craftsman.com account.

[stahleyp]

I do find it interesting that Sears has over 2.8 million "likes" on Facebook. In addition, Kmart has 1.2 million. That compares very favorably to HD at 1.1 million, Lowes at 2.5. However, it's very, very poor against Walmart and Target - 20 million + for both.