Sears Holdings (NASDAQ: SHLD) really blew its earnings numbers. According to Briefing.com, Sears' Q1 adjusted earnings missed by 68 cents. Nope, no beating by the proverbial penny here, folks. Sears was expected to report an adjusted profit closer to 15 cents per share; instead, not the 53 cent loss booked by the retailer. Man, that's bad. Wall Street also expected a better top-line performance. But Sears couldn't come through on that count, either. Net sales for the quarter declined almost 6% to a little more than $11 billion.
But wait, there's more bad news. Same-store sales at Sears took a turn for the worse, diving almost 10%! Comps at Kmart decreased 7%! The gross margin went down! Want more, or is that enough? The Sears story is not a good one. What's going on here? Well, the release does say something about a bad economy, but that isn't a worthwhile excuse. Sears simply needs to apply itself and get traffic into its stores. Use some thinking-outside-of-the-box marketing campaigns to reignite the brand's fire.
Management seems confident in the future of Sears and Kmart, since it highlighted plans to repurchase shares. That's all well and good, and certainly you might as well buy low, but I'm not going to join management in its investment. The stock is at the low end of a wild 52-week range. The low, according to AOL Finance, is $84.72. The high is $183.25. Is Sears a value at its current price of $86.14 (this is as of Thursday's close)? Who knows? But, fellow investors, I'm not stepping in.
Sears and its brand is hurting. There are better ideas out there, such as Target (NYSE: TGT) and Wal-Mart (NYSE: WMT). The release did indicate that Sears would have positive free cash flow for 2008, which is a positive (I do love free cash generation), but it's not enough to sway me; call me bearish on the leadership skills of Eddie Lampert.
Disclosure: I don't own shares in any company mentioned here; positions can change at any time.
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Reader Comments (Page 1 of 1)
5-30-2008 @ 11:40AM
MSF said...
MAYBE THEY SHOULD START SELLING CHEESEBURGERS.
5-30-2008 @ 5:28PM
MSF said...
CRAMER SAID TO BUY AT $!80.