Sears has another crapsman spring

By most measures, Sears Holdings Corp's (NASDAQ: SHLD) latest confession that same-store sales continue to suck would be a sign to abandon ship. However, the fact that Eddie Lampert, a Warren Buffett disciple, is at the helm with billions of dollars of loose cash in his pocket continues to buoy up the foundering company's stock.

The spring sales results were stinkers, for sure. Kmart sales fell 3.9%, while Sears stores took a 4% hit, this after a concerted effort to trim expenses. With these results, the company warned that the second quarter EPS would finish at $1.06-1.32, far short of analyst's expectations of $2.12.

The slacking sales have been blamed variously on the housing decline, rising energy costs and poor weather conditions. No mention was made of tired locations, tired store designs and uninspired product lines, all of which could be addressed with some of the $3 billion plus cash on hand or the $4 billion in prearranged borrowing in their pocket. The company, instead, bought back almost $500 million in shares in the past nine weeks, with a further $1 billion already authorized by the board. This should offset some of the profit shortfall, but the market is indicating its overall displeasure with a sharp decline in SHLD price of more than 6%.

The question is, does Lampert intend to invest to check the decline in the value of these iconic brands, or pull them apart to strip out their value and use the profits to acquire other properties? The longer Sears and Kmart are allowed to languish, the more probable this seems. Recent speculation by BloggingStocks writers about this issue are seeming prescient.

Why Sears Stinks – Julie Tilsner
Wal-Mart takes #1 spot in retail as Sears drops - Brian White
Examining Eddie Lampert's portfolio- Sears Holdings - Brent Archer