Author Topic: SHLD - Sears  (Read 2039654 times)

DooDiligence

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Re: SHLD - Sears
« Reply #8750 on: January 10, 2017, 05:28:42 PM »
This thread is long...

...but it could be longer.  ::)

So in that spirit, imagine Lampert calls you up and says, "I've seen that long discussion about me and Sears on CoB&F so I ask you big fella...what would you do with Sears Holdings if I handed the keys over to you?"



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Mephistopheles

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Re: SHLD - Sears
« Reply #8751 on: January 10, 2017, 05:36:16 PM »
Makes zero sense. If you know and realize that the company is heading downhill, you don't make statements for years and years. You act. And that means shutting down all stores, all at once if there is no way to make a business plan that only retains those that are profitable.

The guy appears in denial and the article points as such. The longer he waits, the worst it gets and with the rapid growth of online retail, it is getting worst overtime to realize the value on the real estate.

OR maybe that he got it and realized that he waited too long to do the above. Now the only solution is to keep repeating this lie to delay the death spiral and to screw other stakeholders by doing various spinoffs and offering secured debt.

Cardboard

+1

The argument that it's better to keep stores running at losses rather than shut down as fast as possible never made sense to me. Then they say, well some of them are profitable; well keep them running then! But so far after hundreds of store closures SHLD continues to burn money. People don't seem to be thinking dynamically, that those stores are only profitable now because of the scale, but they wouldn't be stand alone.. so just shut the god damn thing down, all of them.

Probably the same people who defended Eddie for keeping the stores open since it's "emotionally difficult to lay off all those people". Yea, meanwhile he screws over his own shareholders and makes shady financing deals on top of that. There is no excuse. He's not delusional; imo he personally (and ESL) will end up just fine. It makes me concerned as a SRG holder to be honest given the recently announced financing there, but it makes me feel a bit better that Buffett is an owner.

Gregmal

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Re: SHLD - Sears
« Reply #8752 on: January 10, 2017, 07:04:38 PM »
Makes zero sense. If you know and realize that the company is heading downhill, you don't make statements for years and years. You act. And that means shutting down all stores, all at once if there is no way to make a business plan that only retains those that are profitable.

The guy appears in denial and the article points as such. The longer he waits, the worst it gets and with the rapid growth of online retail, it is getting worst overtime to realize the value on the real estate.

OR maybe that he got it and realized that he waited too long to do the above. Now the only solution is to keep repeating this lie to delay the death spiral and to screw other stakeholders by doing various spinoffs and offering secured debt.

Cardboard

+1

The argument that it's better to keep stores running at losses rather than shut down as fast as possible never made sense to me. Then they say, well some of them are profitable; well keep them running then! But so far after hundreds of store closures SHLD continues to burn money. People don't seem to be thinking dynamically, that those stores are only profitable now because of the scale, but they wouldn't be stand alone.. so just shut the god damn thing down, all of them.

Probably the same people who defended Eddie for keeping the stores open since it's "emotionally difficult to lay off all those people". Yea, meanwhile he screws over his own shareholders and makes shady financing deals on top of that. There is no excuse. He's not delusional; imo he personally (and ESL) will end up just fine. It makes me concerned as a SRG holder to be honest given the recently announced financing there, but it makes me feel a bit better that Buffett is an owner.

I've never really been a sympathizer of Eddy's but is there not merit to the idea that shuttering all the stores at once could just as easily harm the value of the real estate in terms of sheer volume coming to market all around the same time?

Otherwise, I always think its funny to look at this as follows. Say you come here from another planet. You have no context. You read the timeland/transcript of the SHLD story. There isn't a way in the world where you walk away thinking anything but "this Lampert guy is a moron". Meanwhile many of us, capable and intelligent folks, keep rationalizing everything he's doing simply because "he's Eddy Lampert".

lschmidt

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Re: SHLD - Sears
« Reply #8753 on: January 10, 2017, 08:14:16 PM »
It's a difficult thing to lay off 300,000 employees (at the peak) who rely on you for sustenance. There is an emotional obligation and an inevitable psychological conflict involved.

FCharlie

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Re: SHLD - Sears
« Reply #8754 on: January 11, 2017, 07:59:14 AM »
There have been quotes on this thread that show that Shop Your Way expenses are near $1 billion annually. The pension is draining about $400 million annually last I looked.

Those together account for an enormous amount of the cash burn.

I think the idea that all stores should close immediately may not be correct. I'd shut Shop Your Way immediately, fund the pension instead, then offer more pension buyouts (with pension assets not SHLD cash)

At this point, I'd either sell the remaining real estate to Seritage, or do what Seritage is doing. Speaking of which, what ever happened to the St. Paul MN, Rice Street project? That was announced four years ago and nothing since.


gurpaul88

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Re: SHLD - Sears
« Reply #8755 on: January 11, 2017, 08:19:07 AM »
It's a difficult thing to lay off 300,000 employees (at the peak) who rely on you for sustenance. There is an emotional obligation and an inevitable psychological conflict involved.

+1

Jurgis

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Re: SHLD - Sears
« Reply #8756 on: January 11, 2017, 11:25:34 AM »
It's a difficult thing to lay off 300,000 employees (at the peak) who rely on you for sustenance. There is an emotional obligation and an inevitable psychological conflict involved.

Well, don't shut the stores then. Get a retail person who can try to fix the retail side. Didn't JCP recover even after the near-brush due to questionable decisions? Wouldn't a good retail person have done something better than Sears is now?

wisdom

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Re: SHLD - Sears
« Reply #8757 on: January 11, 2017, 11:43:05 AM »
You could choose to hold onto what worked in the past or move forward.

Holding onto the past is comfortable and for a while may feel like you were winning. Though, the outcome is a foregone conclusion, if you think longer term.

Choosing to move towards what could work in the future may look like you are losing the battle in the short run. But the outcome is uncertain. Chance of failure is lower than 100%. In the meantime, you spin off some assets which ensures you still get some value out of it.

Uber chooses to raise funds in markets and is valued at $60 B. SHLD is using the assets it has while trying to preserve as much value as it can.

Now you can argue Uber is great and guaranteed success because the market values it at $60 B and SHLD is a $0 because it loses money and it's sales have declined to $25 B. While Uber is growing rapidly and is doing $2 B in sales and is on track to lose about $3 B this year.

It comes down to your perspective.
« Last Edit: January 11, 2017, 04:17:50 PM by wisdom »

oddballstocks

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Re: SHLD - Sears
« Reply #8758 on: January 11, 2017, 11:51:24 AM »
It's a difficult thing to lay off 300,000 employees (at the peak) who rely on you for sustenance. There is an emotional obligation and an inevitable psychological conflict involved.

+1

This happens all the time when companies suddenly shut their doors and liquidate.  Especially with smaller businesses.  One day employees show up and the doors are locked. 

With Sears I understand there would be logistics involved in transporting inventory and selling off real estate.  The real reason ESL hasn't done this is it would create a fire sale condition where he wouldn't be able to realize the highest and best value for his properties.  But at this point he's slowly liquidated himself into the same situation.  If a store was thinking about building space at a mall with a Sears do you think they'd spring for new construction, or just wait out Sears' demise? 

There is a LOT of empty retail space in the US.  Sears isn't selling into the best market.  By holding and providing minimal wages and arguably poor working conditions for employees he's done them and himself a disservice. 
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T-bone1

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Re: SHLD - Sears
« Reply #8759 on: January 11, 2017, 01:10:10 PM »
The short interest is unsurprisingly up about 1.5 million shares (as of December 30th) to 16,593,280...

...just doing my part to get this to 900 pages. T-Bone1