Sears avoids oblivion -- for now
Beleaguered retailer catches a break.
Sears Holidings (SHLD) is planning to sell anything it can as the struggling retail chain tries to convince investors that it is not going to wither away into oblivion. The message got through to Wall Street loud and clear.
Shares of the 119-year-old retailer soared in early morning trading, gaining more than 20% and hitting $63.09. The stock had plunged 56% last year, but made up lost ground this year as investors speculated that controlling shareholder Edward Lampert would take Sears Holdings private. Sears Holdings, though, isn't out of the woods yet.
Under the leadership of Lampert, Sears Holdings has tried to convince shareholders that a turnaround was just a quarter or two away -- only to disappoint. But on Thursday, the company announced plans to sell 11 retail locations to General Growth Properties (GGP) for about $270 million. Sears Holdings will also separate 1,250 smaller-format Hometown and Outlet businesses through a rights offering that the company expects to raise between $400 million and $500 million. It is also shuttering 120 poorly performing stores.
While it's nice that Sears Holdings is shoring up its balance sheet, the moves don't address the company's fundamental problem, which is a lack of customers. Sears has watched helplessly for decades as rivals such as Wal-Mart (WMT) and Target (TGT) siphoned away its business. Its brand identity is muddled. Can anyone describe what it means to be a Sears customer? I am at a loss for words.
There is plenty of fat for the company to trim. Sears Holdings has what it describes as "one of the largest corporate real estate organizations in the world," which it should probably sell. It should also unload the preppy catalog company Land's End, which it acquired in 2002 for $1.9 billion. Three years after the deal closed, Land's End CEO Mindy Meads was fired following a clash with Sears management.
Investors are now watching the wrenching decline of a once-iconic brand. The Hoffman Estates, Ill. company reported Thursday a net loss in the fourth quarter of $2.4 billion, or $22.47 a share, versus net income of $374 million, or $3.43 a share. Bloomberg News says the loss was Sears' largest since 2002. Revenue, which has dropped for more than a dozen straight quarters, fell to $12.48 billion. On an adjusted basis, profit was 54 cents. Wall Street analysts were expecting a profit of 54 cents on revenue of $12.44 billion.
Jonathan Berr is long Target.
Sears would survive better if they provided better employee training and taught employees to answer questions with knowledge, not bull crap. My home used to be filled with Kenmore appliances, now we have one Kenmore freezer and we dont go back due to ill informed employees who cant help you they just want to make a sale.
Sears would do better to become better than Walmart with employees who know something about home improvement, decorating, appliances, etc.
Sears slogan is "Sears Sucks", adapt with the times and put things in place that will give you the edge over Walmart and Target. I dont like shopping either one but, for all the misinformation and pricing discrepancies at Sears, I wont shop Sears. And their Craftsman tool warranty only works if they want it to. The Craftsman tool warranty is a bait and switch tactic and they do not honor the warranty of free replacement unless you get the right person.
Sears, like other retailers with store credit cards blew it when they sold their credit to an outside source. Used to be, sears had a card with interest rates low enough you could pay it down, then shop at sears again. They had a minimum payment process that was accumulative allowing some breathing space for those tight times when cash was scarce.
Now, you can't pay the card down meaning you can't buy from sears.
Sears customers, many of them are mired in paying off high interest credit cards, which translates into fewer customers.
The old retail establishment understood that customers must have cash or credit. Sears Credit cards are a vampire - they suck money that would be spent on merchandise into the maw of a credit vacuum.
And the greatest advertizing gimmick ever? The catalog? Drooled over by kids and adults? They killed it off.
If someone set out to actually kill the sears brand, they could not have worked up a better whammy on purpose.
Too bad. I loved my catalog, loved Sears. But like Montgomery Wards, the people in charge forgot the root of any business -the customer.
I agree with the catalog comment. I stopped shopping at Sears when they discontinued their catalog.
I do walk through the local store at the mall, sometimes, just to check sales. The store reminds me of old people. I mean it is outdated. They just don't seem to have a handle on current fashions.
I worked for Sears for 20 years and have tried to post the Truth about what has happened to the company, only to have My Post Blocked.
Mr Lampert must have a deal with MSN to block anything negative !
the interest they charge is astronomical,why use there sears card?
They are nothing more then a China outlet store!
China needs to be dealt with! in high tax's on there imports
Copyright © 2014 Microsoft. All rights reserved.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.