jeffmori7 Posted November 8, 2013 Share Posted November 8, 2013 Someone's buying SHOS at those prices? Luke, do you own some? Link to comment Share on other sites More sharing options...
Luke 532 Posted November 8, 2013 Share Posted November 8, 2013 Someone's buying SHOS at those prices? Luke, do you own some? Yes... It's certainly interesting enough for me at current prices. I initiated a position today in the $29.XX range. Link to comment Share on other sites More sharing options...
GrizzlyRock Posted December 6, 2013 Share Posted December 6, 2013 Press release is out. 1,239 stores at 10/27/13 so a decrease of 11 stores in the quarter. Main reason was a closure of 14 SHOS Appliance showrooms inside of OSH. No more closures to come wrt OSH given the termination of the relationship in Q3. So growth of 3 other units -look to the Q for more info. Slight decrease in SSS owing to "The 2.0% decrease was primarily driven by lower major appliance and apparel sales in Outlet, lower Hometown lawn and garden sales, lower tools-category sales in both segments, and lower consumer electronics sales following our planned exit from the this category in most Hometown stores. These decreases were partially offset by higher major appliances sales in Hometown" Gross profit slightly up on an "apples-to-apples" economic basis. Outlet franchise revenues up and allowed the continuation of "our (SHOS) transition to an asset light, franchised operation". SHOS repurchased 1.2% of FD stock outstanding in the quarter for $8.4 million I'm looking to the Q for cash generation. Other than that the quarter was roughly in-line with my thoughts. http://www.sec.gov/Archives/edgar/data/1548309/000154830913000073/shoexhibit99112613.htm Link to comment Share on other sites More sharing options...
asw310 Posted January 16, 2014 Share Posted January 16, 2014 Anyone interested in this? Stock near lows. Not sure what to make of all the noise from SHLD/retail in general yet. Link to comment Share on other sites More sharing options...
txlaw Posted January 16, 2014 Share Posted January 16, 2014 Anyone interested in this? Stock near lows. Not sure what to make of all the noise from SHLD/retail in general yet. I've been buying. Will be interesting to see what their quarter looks like. I'm sure the weather will be blamed again if there are SSS issues. Link to comment Share on other sites More sharing options...
BTShine Posted January 16, 2014 Share Posted January 16, 2014 I think it's a good buy at these prices. They own almost all of their inventory (room for financing their inventory to increase the stock buyback). The stock trades at a relatively low P/E of around 12. Link to comment Share on other sites More sharing options...
thinkpad Posted January 16, 2014 Share Posted January 16, 2014 Anyone interested in this? Stock near lows. Not sure what to make of all the noise from SHLD/retail in general yet. I've been buying. Will be interesting to see what their quarter looks like. I'm sure the weather will be blamed again if there are SSS issues. q4 SSS won ´t be good. It has been explained in last 10Q. Link to comment Share on other sites More sharing options...
txlaw Posted January 16, 2014 Share Posted January 16, 2014 Anyone interested in this? Stock near lows. Not sure what to make of all the noise from SHLD/retail in general yet. I've been buying. Will be interesting to see what their quarter looks like. I'm sure the weather will be blamed again if there are SSS issues. q4 SSS won ´t be good. It has been explained in last 10Q. But how bad is the question. We'll see. I suspect that weather actually will play a part in their discussion, as it affected all of retail in a negative manner. Link to comment Share on other sites More sharing options...
jeffmori7 Posted January 18, 2014 Share Posted January 18, 2014 http://seekingalpha.com/article/1936511-a-sale-is-going-on-at-sears-hometown-and-outlet-stores?source=yahoo Link to comment Share on other sites More sharing options...
Luke 532 Posted January 31, 2014 Share Posted January 31, 2014 BlackRock takes position in SHOS http://www.sec.gov/Archives/edgar/data/1364742/000108636414001489/sears.hometown.and.o.txt Link to comment Share on other sites More sharing options...
APG12 Posted February 12, 2014 Share Posted February 12, 2014 Does anyone have a grasp on what would happen to SHOS if Sears entered bankruptcy and the appliance/tool brands were on the chopping block? I'm trying to wrap my head around this company's dependence upon Sears and what it might look like 10 years down the road. Edit: From the S-1 ...under the Merchandising Agreement, if (i) an unaffiliated third party acquires all rights, title and interest in and to one or more (but not all) of the Kenmore, Craftsman or Diehard marks, or the “KCD marks,” then subsidiaries of Sears Holdings may terminate their obligation to sell to us the products that are branded with the KCD marks that were subject to such acquisition and (ii) if an unaffiliated third party acquires all rights, title and interest in and to all of the KCD marks, then subsidiaries of Sears Holdings may terminate the Merchandising Agreement in its entirety. Link to comment Share on other sites More sharing options...
Guest wellmont Posted February 12, 2014 Share Posted February 12, 2014 presumably the buyers of the trademarks and brands would need places to sell them. and the shos stores would be primary. i don't see it as a risk. bk is a reorganization of finances and obligations. beyond that business goes on as usual. Link to comment Share on other sites More sharing options...
APG12 Posted February 12, 2014 Share Posted February 12, 2014 presumably the buyers of the trademarks and brands would need places to sell them. and the shos stores would be primary. i don't see it as a risk. bk is a reorganization of finances and obligations. beyond that business goes on as usual. Sears is contractually obligated to provide (for a fee, obviously) SHOS with: "certain tax, accounting, procurement, risk management and insurance, advertising and marketing (including online services), loss prevention, environmental, product and human safety, facilities, logistics and distribution, information technology, payment clearing and other financial, real estate management, merchandise-related and other support services" through 2018. and "administrative services with respect to our employees including, payroll, benefits and certain other human resources support services" through 2018. So Sears is going to be providing a lot of back office infrastructure for many years to come. Since the point of bankruptcy is to break contracts, I think it's at least prudent to recognize the interdependency here. Link to comment Share on other sites More sharing options...
Evolveus Posted February 12, 2014 Share Posted February 12, 2014 Does anyone have any specific insight as to why Force Capital liquidated their 5.6% of SHOS shares recently? Also, when is the next earnings announcement, and what do you think is a good resource for an earnings calendar/list of upcoming earnings. If its not on Yahoo Finance, I waste alot of time clicking around companies' websites often to no avail. TIA Link to comment Share on other sites More sharing options...
Evolveus Posted February 21, 2014 Share Posted February 21, 2014 Todd Sullivan's slide from Manual of Ideas/Value Conferences presentation slides. FYI - I pulled these down from a public site where Todd had posted them - not Value Conferences.SHOS_Presentation.pdf Link to comment Share on other sites More sharing options...
adesigar Posted February 21, 2014 Share Posted February 21, 2014 Todd Sullivan's slide from Manual of Ideas/Value Conferences presentation slides. FYI - I pulled these down from a public site where Todd had posted them - not Value Conferences. Thanks for the slides. Link to comment Share on other sites More sharing options...
hyten1 Posted February 27, 2014 Share Posted February 27, 2014 how do you feel about shos relying on shld for quite a few things, i know its an advantage now, but it can artificially make shos look better than it is if/when shld decide to change the terms? Link to comment Share on other sites More sharing options...
premfan Posted February 27, 2014 Share Posted February 27, 2014 Here's a short story (apologies in advance for the hyperbole, this was written for friends) In the year 2000, a relatively young hedge fund manager buys a significant stake in a company called Autozone. This company sells auto parts and accessories among other business lines. It holds up well in recessions, and chugs along during good economic times. However, most criticize the company for failing to grow its SSS (same store sales). It is expanding quickly; opening new parts stores all across America, and overseas. This means revenue increases and income growth slowly follows as the new stores make up for the flat SSS year over year. Fortunately, the young hedge fund manager has influence over the capital allocation policies of the company - he's smart in this area, his idol is Warren Buffett, and he encourages the company to buy back stock. The company doesn't pay any dividends, it has an "asset light" model and so ploughs back most of the cash flow into repurchasing shares. From 2003 - 2013 same store sales at Autozone don't budge - the average store had exactly the same number of sales - if not for the growing store numbers this would have been an appalling result. Share count, on the other hand, goes from 96m to 36m. Earnings per share increase from $6.60 to $28. From 2000 to 2014 the share price moves from $20 to $540 or 27x Charlie Munger says an investor can beat the market by focussing his attention on 1. Spinoffs and 2. Cannibals. Autozone was a cannibal - it ate itself up repurchasing shares. That hedge fund manager, unknown in 2000, is now the billionaire investor in, and CEO of, Sears Holdings, the ailing retailer. And now, Edward Lampert has a large stake in this recently 1. spun off company, virtually assured to be a 2. cannibal as time goes on. Yet the company is neglected and cheap compared to its competitors - it's SSS aren't growing fast enough! Enter Sears Hometown and Outlet (SHOS). 27/2/2014 $25.27, market cap = $537m After running through the gates post being spun off to a price of $57/share, SHOS has fallen below its issue price, and is near to the lowest price in it's short history. But what is SHOS? Well, it ain't Sears Holdings thats for sure. But it is tainted with the same brush, and this is what provides the opportunity. Unlike SHLD, SHOS operates a franchisee model for 1. Hometown and 2. Outlet stores. (1240 locations) Unlike SHLD, these divisions are profitable. They do not own 85% of the real estate underlying the stores and Unlike SHLD, the franchisee's take on the occupancy cost. For every $25 you pay per share, you get about $2eps in return. So roughly 12x, give or take one day of fluctuation in the share price. (note, competitors Lowes and Home Depot are selling for 21x and 20x respectively) 1. Hometown (1100 stores) is the 4th largest appliance retailer in the USA. They sell great and popular brands Craftsman, Kenmore and Diehard. 2. Outlet (140) is a seller of outlet stuff - broken, worn etc. The Co owns most of these themselves. There is potential, as I understand it, to increase franchisee stores to 3000 over time (sound familiar? Autozone went from 1200 to 5000). From a franchisee perspective, it is attractive to open a store. Its important to note that most of these stores are in small towns and communities across the USA. And what they sell is not generally easy to sell over the internet. Also, when SHLD spends $50m a year on advertising, SHOS gets the benefit of this. If someone buys a SHOS item on the SHLD website, the revenue goes to SHOS. This is a huge free option and a huge advantage over competitors. There is more to the story (and some negatives) but, to summarise: When you buy shares in SHOS, you get a fairly priced company in its own right, but you have: 1. A growing business with nice free cash flow. 2. An owner with a proven history in capital allocation who controls the board (directors are past ESL execs). Being recently spun off obscures an easy understanding of the company, but a large and continuous share buyback program is not a question of if but when. We have seen what they will do based on past experience with Autozone. Basically, this a boring, slow growing company, controlled by a master capital allocator. If SSS don't increase, you can still do very well. The Autozone case is instructive - history doesn't repeat but it does rhyme. Now, my question for board members is, why buy SHLD when you can buy SHOS? The attention given to SHLD is enormous, yet only one of them seems to be moving forward - at least for the time being. Or is this the wrong way to look at SHOS? Great thoughtful post! Mine we be less thoughtful ( i only have a few mins). So your thesis is it worked with autozone it should work with shos? Its not that simple because there is always demand for auto parts and at the time of lampert taking over they were the dominant auto parts player in the industry. Sears is dominant in nothing. Just buying back shares and having a asset light model doesnt make this an autozone clone. People are trying to model things without taking into consideration that you cant fake demand. Demand can not be financially engineered. The combo of increased demand and reducing supply massively made autozone a huge success. SHOS will have to show continued demand. Until then this another wanna be autozone model. If you want a asset light model with good demand and great capital allocation look at nathan's famous. The dominant hot dog player in the U.S. Link to comment Share on other sites More sharing options...
premfan Posted February 27, 2014 Share Posted February 27, 2014 SHOS will have to show me 2-3 years of increased demand to get interested. The thesis will be the same in 2-3 yrs people will continue to say autzone clone. Why not invest when the company shows a track record of growth instead of modeling from day 1. Model later when the facts are there. Buying autozone in 2002 or 2003 would have still made investors alot of money. There is no benefit getting into this from the get go without a track record. The sears holding fans would probadly agree. Link to comment Share on other sites More sharing options...
adesigar Posted March 2, 2014 Share Posted March 2, 2014 Does anyone have information on what is the Cost Basis for SHOS? I thought it was the $15 we paid to buy the shares but I remember some discussion saying we have to add value for the Rights. I cant find any details on Sears Holdings site or SHOS site. Anyone have a link to a document providing details ? Link to comment Share on other sites More sharing options...
Guest wellmont Posted March 2, 2014 Share Posted March 2, 2014 they really haven't bought back much stock at all. so it's premature to compare this to other successful cannibals, especially AZN, which operates in a different less competitive retail sector (a better sector imo). Also the business earned about what it earned in 2010, three years ago. So the numbers support that this is kind of an ordinary business, a meandering business that earns about 10% on equity in a good year, much less in less than good year. So while the construct that this is another AZN in the making has some appeal and would work very well at certain retail oriented brokerage houses to pitch to new clients; it doesn't add up to much yet under scrutiny. I hope you're eventually proven right. But it's too early for this thesis. Regardless, the stock seems cheap in it's own right, and doesn't need a "story" to make it a worthy investment at these levels. Link to comment Share on other sites More sharing options...
constructive Posted March 2, 2014 Share Posted March 2, 2014 You don't have to make heroic assumptions with SHOS sales and free cash flow growth provided buybacks also occur at a decent clip. Yes, but you need to make somewhat heroic ROE assumptions in order to get strong FCF growth plus substantial buybacks. Going back to the 1990s financial statements, AZO's high level of profitability was evident before Lampert ever got involved. He should get credit for buying a great company, not for executing a turnaround or financial engineering. SHOS has OK economics, but they are not as good as AZO at any point in its history. Link to comment Share on other sites More sharing options...
Guest wellmont Posted March 14, 2014 Share Posted March 14, 2014 looking less and less like AZN and more and more like SHLD. Link to comment Share on other sites More sharing options...
ASTA Posted March 14, 2014 Share Posted March 14, 2014 That's how you play with Eddie no pain no gain. Imagine if it would all be easy instead we get just pure pain up or down hell of a lot of fun :D Link to comment Share on other sites More sharing options...
roughlyright Posted March 14, 2014 Share Posted March 14, 2014 I have a small position in SHOS today. Eric Khrom of Khrom capital liked this stock. I am sure we cannot put lot of weight on this, but he has a impressive track record despite holding lot of cash. See his thesis in the attached file2012_Q4_Letter_KCM.pdf Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now