If Sears is just a real estate play, why should store losses matter?

 

But not for long

But not for long

Says here that Sears is crashing after hours because quarterly earnings came in at a loss of $2.01-$2.98 after analysts predicted earnings of $0.26, but why does Wall Street care? My limited understanding of this sorry corporation’s condition is that it’s been holding its share value because of the real estate it controlled, not the number of washing machines it’s selling. Wouldn’t today’s earnings report just hasten the day when that property value is realized?

I leave it to you finance guys to explain.

19 Comments

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19 responses to “If Sears is just a real estate play, why should store losses matter?

  1. Sears is an ongoing criminal enterprise. The sooner it lands in the dustbin of history the better.

    • Anon

      2014 is bringing about the demise of several businesses. Loehmann’s for one, an institution for bargain hunters of designer clothes. Macy’s has let 2500 go. That doesn’t bode well for them. I agree with Richard that the death of Sears is inevitable. The question will be: will it take down Lands Wnd with it?

      • I certainly hope not. I like their dress shirts. I think that brand has enough global value (I know people in the UK who buy via their website) to survive the dissolution. Maybe LL Bean could acquire them.

  2. i remember the hype that penn central was a buy because it owned some of the best real estate in the world even as it lost millions each week in its operations. the operating losses can overwhelm even acres of land in midtown manhattan or suburban malls

  3. towny

    Lampert puts nothing into the stores. They avg $120K a year for operational expenditure.
    Large lawsuit on Craftsman tools. Turns out they are not made in USA and haven’t been for a long time.
    Kmart’s look like Woolworth of olde.
    The only thing Sears has going for it are the Auto centers and they are spinning them off.
    The real estate empire might have been something in 2007, when the stock was trading around $200. They are most likely mortgaged to the hilt and cant get rid of them fast enough. Sucking every penny out of retail to pay the notes.
    Kmarts and Sears retail locales are too close together.

    • Cos Cobber

      my simple reorg plan:

      1) spin off lands end as a IPO – their products are as good as ever.
      2) reposition sears as a home center store only. exit all sears retail not related to craftsman tools and appliances and other home goods. this would dramatically reduce their footprint. a recapitalization will be necessary and lampert cannot have any part of it. he has no credibility, it wont work if he has control.
      3) find an exit plan for Kmart which might mean selling out locations to regional discount chains
      4) either reposition sears auto centers as part of the rebranded sears home centers or sell it to midas, pep boys or some other national chain

      I think the real estate angle has always been totally overblown. Most of their stores on in 30 to 40 year old malls which have been outclassed by two successive generations of retail. Yes, there is some basic landvalue, but that’s overstated in the era of amazon.

      btw, everyone in town notice the blazing business Mavis Tire does these days. the area could really use another reputable tire/brake/muffler/ shop.

      • towny

        The universal problem is over saturation of branding.
        Go to Walmart, Lowes. Sears. Home Despot. ect ect are all china/korea factory stores.
        GE, Maytag, Frigidaire, Sansui, Kenmore all come the same assembly lines.
        See:
        http://www.appliance411.com/purchase/sears.shtml.

        • cos cobber

          what’s your point? its been that way for 30 years for hundreds of consumer products, so what?

          sears as a distribution channel for appliances is still formidable with over 25% of total national sales. wow. despite its declines, there should be an opportunity to do something profitable and successful with this volume under the right mgmt.

          http://money.msn.com/now/post–sears-sees-its-appliance-business-slump

        • Anonymous

          Try Aitoro for Speed Queen washer and dryer. Only brand made in the U.S. in Wisconsin. Built to last and great quality. At a time when it is hard to buy “made in the USA” this is one exception.

      • Re Mavis, they do well in Westchester too, but tirerack.com is going to amazon them to death. The service is great, the prices are consistently lower than Mavis and they don’t charge me sales tax. You would have to pay it because they opened a warehouse in CT, but you’d also get your tires next day via UPS ground.

        • pulled up in OG

          So I get four tires in the mail.

          Then what? : )

        • Anonymous

          tirerack is awesome. they deliver to the installer of your choice and also provide recommendations for installers. lower prices, tremendous inventory, larger cumulative consumer comment section, etc. …

        • You can take them to any garage to have them put on. Mavis is going to charge you for installation too. Tirerack also has a list of approved installers you can search by zip code. I just have the dealer do the swap when I have the car in for scheduled maintenance. Tirerack will sell you alloy wheels and mount and balance the tires and install tire pressure monitoring sensors if you need them. That’s what I did with my last set of snow tires and it makes it so easy to put them on the car the dealer doesn’t even charge me for doing it.

  4. Artie

    I recently heard that the only profitable business that Sears has going for it is Lands End, which they are looking to spin off on its own, so when the sh*t hits the fan, it will be protected, and able to survive.

    The real estate play isn’t good – especially if your tenant isn’t doing well…

  5. ajnock

    A retailer that can’t earn money during the 4Q Christmas season does not deserve to exist any longer.

  6. Matt

    The Sears brand is no longer relevant. A facelift of the stores and merchandising won’t fix it. No way anyone under the age of 50 is going to buy clothes from Sears. It is time for a re-branding. Change the name. Sears belongs in the dustbin of history along with Oldsmobile, Max Factor, Pan Am, EF Hutton, Schlitz, Compaq, MCI, Pullman, General Foods, Circuit City, Paine Webber, Woolworth’s and so on. A lot of these brands though they no longer exist are now part of much larger, stronger organizations where their technologies or service offerings still provide real value to customers.

  7. Anon

    Towny, you are not correct, yes Kenmore appliances are all manufactured by other companies Sears but the brands you mention do not come off the same lines as you mention. Maytag, Whirlpool and GE do much of their manufacturing right here in the good old USA, which are sold in HD and Best Buy as well as stand alone appliance stores.

    • towny

      Maytag Whirlpool and GE are sold at Sears as well.

      Over-saturation???

      1 Example:
      Sears offers over 1000 24 inch dishwashers. All the brands. Between licensing and markup, Sears is cutting their own throat.