New Sears has same problems as old one
Wall Street's faith in the retailer's chairman is wearing thin.
Sears Holdings (SHLD), the beleaguered retailer owned by billionaire Edward Lampert, announced Tuesday that it expects to receive $446.5 million from an offering tied to the spin-off of Sears Hometown and Outlet Stores. The stock is set to begin trading under the SHOS ticker on Friday.
The "new" Sears is really dependent on the old one, and investors should avoid the stock.
According to SEC filings, Sears Holdings has agreed to provide Sears Hometown with Sears-branded products, including Kenmore appliances, Craftsman tools and DieHard batteries through a merchandise agreement that expires in 2018.
Sears Hometown may need to rely on Sears Holdings for merchandise beyond 2018. That may pose some problems in the coming years as Sears Holdings tries to sell its products through other outlets.
"Kenmore, Craftsman and DieHard branded products accounted for approximately 60% of our combined revenue during 2011," the company's S-1 filling says. "Recently, Sears Holdings has agreed to supply certain other retailers, including certain of our competitors, with a number of Craftsman and DieHard branded products that previously were only sold through affiliates of Sears Holdings. If Sears Holdings continues to supply other retailers, including our competitors, with Craftsman and DieHard branded products, or begins to supply other retailers with Kenmore products, our revenue may be adversely affected."
There are 1,238 Sears Hometown and Outlet stores, many of them independently owned, in all 50 states, along with Puerto Rico, Bermuda and Guam. Comparable-store sales, a key metric, were down 1.2% in the 12 weeks ended July 28, according to the company's 10-Q. Net income during that time almost doubled to $21.07 million, while net sales jumped 2.4% to $644.5 million.
Like Sears Holdings, Sears Hometown will be controlled by Lampert, who will not be shy about advising management on actions he believes it should take. Lampert will also look out for himself. As part of the spin-off, Sears Hometown will take out a $250 million credit line and will use $100 million of that money to pay Sears Holdings a cash dividend.
Wall Street has lost faith in Sears. The company, whose shares have nearly doubled this year in the hopes of better times or a Lampert buyout, is trading well above the average 52-week price target of $17.10. Splitting Sears up doesn't solve the retailer's biggest problem, which is that shoppers prefer to spend their money elsewhere.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter@jdberr.
The issue or problem is not "The Mexicans" as your racist statement makes. The issue is the lack of vision and common sense Mr. Lampert continues to show. While he may see himself as a financial wizard if he had any intelligence at all he would hire experienced retail executives and then allow them to do their jobs. Unfortunately due to his nature of being a control freak he just will not allow those talented people that he has hired or those with tenure in his kingdom to do what it takes to keep Sears and Kmart from sinking.
Go into any Sears/Kmart anywhere in the U.S. and you will see the same mistakes over and over. Dirty, dingy stores with worn out and beaten staff members selling the same products other retailers sell for much higher prices. Stores operated by inexperienced Managers whose only talent is to follow Corporate directions to the letter or be faced with their employment being terminated
The only good thing that will come out of Sears/Kmart failure will be Lampert's ego having to deal with the infamy of having destroyed two American Icons. The real loss will be the thousands of hard working dedicated employees who will join the millions of unemployed Americans.
My sister purchased a washer from Sears last year, a couple of months later it needed repaired because of a no good part. The repairman said there was an issue with that particular washer, which of course Sears was aware of, and changed the part. Right after the warranty was up the exact same thing happened, she once again called Sears and they told her they were sorry but the warranty was up and she should have purchased a extended warranty. She explained that it hadn't been a year since they replaced the part, they said the part was only guaranteed for 30 days. The washer was on sale for less than $300.00 and the repair would be $350.00 plus labor! They are aware this washer is junk but keep on selling them. Their final offer was a 20% discount on a different washer which you can get anytime. Why in the world would they think she would want to buy another washer from them when the knowingly sell faulty products? And they wonder why they're going down the tubes!! They deserve it!!
the sears in long beach ca has basically gone all mexican. the music in the store,
the signs are in spanish and most of the salesclerks are mexican. if you even find
a clerk you can not understand them
Sounds like to me they are thinking about going down that road .. WAL MART(aka China-mart) has done.. as they say live better... RIGHT..
Sears needs to stick with what is working.. and dump the stuff that is not.. Try to bring in better products.. even usa made.. products.. they would be better off in the long run..
We will not charge any more on the Sears Citi MC, They will not send you a bill ( happened 3 times to us on 2 different Accounts, so if you forget about it ( which we didn't) they can charge you the high finance charge plus $ 35.00 late fee!!! We heard from other people that this happened to them.So unless we pay by cash no more Sears for us!!! You won't get rich from us by collecting late fees Edward Lampert but we know there are busy people out there which could forget they charged if no bill arrives!! So what is up Mr. Lampert with your Billing office??????
By the way our mailing address is ok we receive all the other junk from Sears!
The Sears name Craftsman used to mean something good all the way around for consumers. Now, Sears slaps it on almost anything in order to sell a product. The Craftsman name used to mean whatever used to have the name virtually was guaranteed forever and was guaranteed to be of exceptional quality. Not anymore. Shoddy substandard products and replacements are used as substitutes to the degree a person would be better off to keep going elsewhere.
Sears Die hard and Kenmore brands are about the same. Sears where top quality used to be a factor, now it means substandard product and services to most people. Sometimes much lower standards than a similar national brand.
Kenmore for example used to mean top quality because Sears would have manufacturers use better standards and materials for a product. Now it does almost the same thing in reverse. Die hard used to mean top quality and would darned near last forever guaranteed. Now, it means very little to nothing and many other brands are much better.
Sears needs better or more people skills. Sears employees are generally plastic and bottom of the barrel when it comes to their experience in a field. Why is that? Most Sears customers are almost treated like prey instead of people too. Why is that? But, does that come as much of a surprise when Sears doesn't treat their employees any better? Where does it all usually start? Generally at the top? Where does it end? At the bottom of their chain with consumers who are fed up. Many people have come up with their own brand to counter Sears brand of product. It's called "Nevermore."
Sears has forgot one huge thing that basically turned them into what they are today. People, all people, customers, employees and shareholders are people first. They see others mistreated and figure they could be next? In Sears case, it's not the money, but it is? It's their own sad distorted treatment of people that is haunting them into extinction. Sort of like today's politics? Their own selfish lopsided greed has almost done them in from what I've seen.
I worked for Sears in the 60's. I was paid an hourly wage plus a sales commission. I made decent money because the commission incentive was worth the extra effort, Sears had a
good retirement benefit package and health benefit package. These were changed in the 70's and with them went the quality selling effort. Sears has been known for its "loss leader" sales
where an item is posted as a sale special but if you move the shelf sale tag you will sitll find that
the sales price and regular price are the same, Sears was once known as the arms supplier
for sportsmen. When a certain "Prince" became one of the top managers, firearms and ammo were dropped. Too bad. Sears went liberal and soft. The same thing is going to happen with
WalMart. Too many items Made in China and they are not robust. I guess the infection of "building
in obsolence" is in all of their products and add to that, their better products are very expensive.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The rollout of the new national health care plan has been far from perfect, but some sectors may get an Obamacare bump.
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.