Comments on: Store Redesigns, Not Asset Sales, Top Lampert’s Priority List for Sears

By: John Christy

John Christy — Wed, 05 Dec 2007 01:28:00 +0000

I really like Sears’ strategy of boosting profit within its existing stores rather than mindlessly looking to expand. The problem I see with Sears is that it seems to lack an identity among retailers. It’s not discount, but it’s not premium either. Other than hardware nuts, there’s no archetypal Sears shopper, and most successful retailers have hung their hats on their most prolific shoppers.

By: Chad Brand

Chad Brand — Wed, 21 Nov 2007 14:04:00 +0000

I plan on posting about the RSTO development shortly, so be on the lookout for that.

Phil:
Congrats on that excellent short SHLD call. Long term though, I still disagree with your outlook, hence I remain invested in SHLD with that time horizon in mind, as I have been for years. Short term, meaningful gains are unlikely.

I do not believe the company needs to become a first rate retailer in order for the stock to rise long term. This is due to a combination of the value of the company's non-core assets, coupled with retail margins that could easily expand from depressed levels.

Right now, the stock price reflects a long term after tax retail margin of around 2.5% along with assigning zero value to the company's other assets. I see huge potential from both of those areas over time.

Thanks for the insights, everyone.

By: phil

phil — Tue, 20 Nov 2007 23:55:00 +0000

After reading that press release, it appears that the long term value bulls in Sears also want to believe in the tooth fairy. There is compelling evidence that the tooth fairy exists you know. The trick is that you have to look really really hard to see it.

Chad I commented about Sears in one of your prior posts on the subject. You may recall that I was fortunate to be short when it finally cracked. I long since covered to my regret. Oh well, who knew.

I even went long last week for a quick long trade that worked out well. In fact, I'm willing to go long again on a trade only basis. A long term hold of Sears is out of the question.

Keep up the good work, but I think you missed the boat on this one. Bottom line, Sears is a 3rd or 4th rate retailer. That isn't going to change.

By: Stephen

Stephen — Tue, 20 Nov 2007 15:22:00 +0000

Yeah, I’d be interested to hear Chad’s commentary on the 14% stake in RSTO.

By: sagacious

sagacious — Mon, 19 Nov 2007 23:58:00 +0000

I’m intrigued by his nearly 14% ownership of Restoration Hardware and his decision to purchase it through Sears rather than through his funds. Certainly there is a strategic fit here, but we’ll see where he takes it.