SHOS - Sears Hometown and Outlet Store

[bci23]

Another thing I can't get over. Why hasn't Eddie Lampert been buying at these ridiculously low prices? He bought at $20 last year but now hes not buying at $6-7?

[randallchsu]

Does anyone have insight into the store count and its significance?  Increasing store count has been part of management's narrative; however, if you look at the management presentations for 2014 vs. 2015 (see attached), they don't appear to be making much progress.

 

Here's what they are showing for store count (See 2014 slides 11 & 18 vs. 2015 slide 8)

 

Total 1260 (2013) vs. 1260 (as of 01.31.15)

Hometown 1117 (2013) vs. 926 (as of 01.31.15)

Outlet  143 (2013) vs. 151 (as of 01.31.15)

 

Interested to hear what others make of the store counts.  I frequently see press releases about store openings, so what explains the lack of growth in store count?  Are they having issues keeping franchisees?  Are they closing underperforming company-owned stores?

 

According the U.S. Small Business Administration, under the North American Industry Classification System Code(s) for Household Appliances stores (443111), the loan failure rate at ~19%, so I would assume there is a natural churn rate for new franchisees to fail within a few years.

[aws]

The Q is out.  As they guided to there is a small profit and signs of a reversing trend.  It's a bit better than the market or I thought - 9 cents of GAAP earnings and 27 cents of adjusted EBITDA.  I thought it was going to be more like 2 cents of EBITDA and another GAAP loss.  The stock is up as much as 20% on the news, but half of that is just getting back the initial pop after the annual meeting.

 

One thing I noticed was that inventories are declining, which would be good on a market to book value analysis, but it may be quite bad long-term if they can't get the inventory they need from Sears.

[BargainValueHunter]

Up 17% in the premarket.

 

http://globenewswire.com/news-release/2015/06/17/745447/10138923/en/Wichita-Welcomes-New-Sears-Hometown-Store.html

 

The Wichita location marks the 16th opening of a new Sears Hometown Store this year and the 24th opening of a new store across all of Sears Hometown and Outlet Stores formats. Unlike most retail concepts, Sears Hometown Stores combine the value, selection and services associated with larger retail stores but are owned and operated by a member of the local community.

 

Doubt this is the reason why though... ;)

[mateo999]

Up 17% in the premarket.

 

http://globenewswire.com/news-release/2015/06/17/745447/10138923/en/Wichita-Welcomes-New-Sears-Hometown-Store.html

 

The Wichita location marks the 16th opening of a new Sears Hometown Store this year and the 24th opening of a new store across all of Sears Hometown and Outlet Stores formats. Unlike most retail concepts, Sears Hometown Stores combine the value, selection and services associated with larger retail stores but are owned and operated by a member of the local community.

 

Doubt this is the reason why though... ;)

 

so with a 17% price pop per new store, all we need is for the store count to double to ~180 for the share price to move to $12.2mm.  $277 trillion market cap baby.  With these types of economics, i think they should do a buyback...

[thinkpad]

Don't forget the closed stores  8) they don't communicate on this.

[BargainValueHunter]

Well that premarket jump from a few days ago didn't hold but I've just checked today's premarket and...

 

SHOS PreMarket Quote: $11.01 +1.60 (17.00%) as of 8:08 AM

courtesy of Marketwatch

 

I have no idea what is going on with this stock.

 

[sampr01]

check volume (1 share traded) :). some one playing games

[BargainValueHunter]

Eddie Lampert boosts ownership stake past 50%.

 

http://www.marketwatch.com/story/edward-lampert-boosts-stake-in-sears-hometown-to-more-than-50-2016-02-11

[3259]

Does anyone have insight on today's filing? 

 

https://biz.yahoo.com/e/160525/shos8-k.html

 

The filing raised questions for me such as:

Why are they selling this property?  Does this represent short term thinking to resolve the issue of the property being listed on the balance sheet at such a low value?  Is this good news for long term holders?

[3259]

It looks SHOS also filed an "AMENDED AND RESTATED MERCHANDISING AGREEMENT" with SHLD on 05/17/2016.  I've heard it contains reduced restrictions on SHOS with regards to internet sales and working with other sources of inventory; however, I haven't gone through the Amended Agreement myself yet.

[Ballinvarosig Investors]

http://www.thetimesherald.com/story/news/local/fort-gratiot/2016/08/08/sears-returning-fort-gratiot/88387660/

 

Thought this was interesting.

[frommi]

Is there a way to lose money here, at these prices?

[Liberty]

Is there a way to lose money here, at these prices?

 

There's always a way to lose money.

[frommi]

Is there a way to lose money here, at these prices?

 

There's always a way to lose money.

 

Of course. But at 50% of NCAV it looks unlikely and there`s at least a ~70% chance that this is a double in the next 2-3 years.

[Liberty]

Is there a way to lose money here, at these prices?

 

There's always a way to lose money.

 

Of course. But at 50% of NCAV it looks unlikely and there`s at least a ~70% chance that this is a double in the next 2-3 years.

 

So you've answered your question with "of course"  :)

[Guest roark33]

This stock has been written up by 101 value investors, starting at NCAV, then 90% of NCAV, etc, etc.  I expect to see one at 10% of NCAV.  It's a terrible business.  This isn't a cocoa bean trade. 

[frommi]

It is of course a terrible business and i wouldn't be interested if it traded close to ncav. I just don't see a logical reason why it should trade at 10% of ncav. Ncav looks to be pretty stable here, and for me its unreasonable to assume that Eddi doesn't get at least 80% of the inventory value in a fire sale or that he does shareholder unfriendly things.

[BargainValueHunter]

Never underestimate the power of Eddie Lampert to destroy value.

[BargainValueHunter]

http://www.barrons.com/articles/eddie-lamperts-big-bet-on-sears-hometown-1479385180

 

Edward S. Lampert, chairman and chief executive of Sears Holdings (SHLD) and the overseer of Sears Hometown’s spinoff, has bought nearly $6.5 million in Sears Hometown stock year-to-date, most recently on Nov. 4. Lampert has thrown cash as the stock continues to fall. Transactions in January were priced at $7.89 on average but the billionaire’s latest purchases were at prices ranging from $4.85 to $4.95 a share.

 

It’s important to note that Lampert bought the 1,514,947 Sears Hometown shares in 2016 directly and on the open market, rather than through his entities: ESL Partners, RBS Partners, and ESL Investments.

 

As he plunked down cash, his beneficial stake, which includes shares held through his entities, crossed the 50% ownership threshold by early February. Lampert now beneficially owns 13,010,965 shares, a 57.3% stake in Sears Hometown.

[Ballinvarosig Investors]

Horrific numbers from Sears Hometown - 1/3rd of book value lost in a year.

 

https://www.sec.gov/Archives/edgar/data/1548309/000154830917000024/exh991earningsrelease12820.htm

[Picasso]

Reading this thread from the beginning is highly entertaining. Would recommend.

[Ballinvarosig Investors]

Reading this thread from the beginning is highly entertaining. Would recommend.

Yep, went from a growth story, to a downside protected by the assets story, to toast in fairly short order.

 

Honestly, I can't help but be impressed by the ability of Eddie Lampert to destroy value. If you had just given me the cold hard cash and a barrel, I don't think I could have burned it quicker than him.

[aws]

Not that it isn't terrible, but the bulk of the loss for the year was the valuation allowance on their deferred tax asset, not anything specific that happened during the year.

[tooskinneejs]

Not that it isn't terrible, but the bulk of the loss for the year was the valuation allowance on their deferred tax asset, not anything specific that happened during the year.

 

A valuation allowance is recorded on deferred tax assets when it is more likely than not the assets won't be realized.  Said another way, management has determined that it is not likely they will generate profits in the future in order to be able to benefit from net operating loss (NOL) tax carry-forwards before they expire.  Said yet another way, management does not foresee profits anytime soon, if at all.