Sears Needs To Do More

A couple people have asked about Sears, including a comment on my last post, so I decided to copy my reply here for all to view:

“As for Sears. my last comment was after they decided to split the management of the company into a holding company structure. My take home message was that such a move would hopefully allow for faster decision making and unlocking some shareholder value, but we would have to wait and see if that actually was the result.

Since then, very little has changed. The retail environment remains very weak and yet the company has made no meaningful moves to unlock value or diversify its business. They just keep buying back stock, which is fine with me, but more needs to be done with the core business.

I have not been adding shares of SHLD and in some cases have actually been cutting back the position. With the weak retail market, stocks like TGT have gotten cheap enough that new money might be better served going there until SHLD shows signs they really are more than just a sub-par retailer.

Until they show some life in that regard, I likely will not become more bullish on the stock. There is value there, but if management does not unlock it adequately, Wall Street won’t take notice.”

Full Disclosure: Long shares of SHLD (just in less quantity than previously) at the time of writing