Comments on The Peridot Capitalist: Store Redesigns, Not Asset Sales, Top Lampert's Pr...

I really like Sears' strategy of boosting profit w...

2007-12-04T20:28:00.000-05:00

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.

I plan on posting about the RSTO development short...

2007-11-21T09:04:00.000-05:00

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.

After reading that press release, it appears that ...

2007-11-20T18:55:00.000-05:00

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.

Yeah, I'd be interested to hear Chad's commentary ...

2007-11-20T10:22:00.000-05:00

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

I'm intrigued by his nearly 14% ownership of Resto...

2007-11-19T18:58:00.000-05:00

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.

I don't think it is clear if Lampert is really run...

2007-11-19T10:25:00.000-05:00

I don't think it is clear if Lampert is really running the retail operation or not. He has hired merchandising people, so they could be behind most of the retail related work. It could have been his idea, however, to try new store concepts, such as store-within-a-store, etc. Hopefully, he is not really being hands on with the designs, etc, as you pointed out.

On the second point, I think you are right in pointing out that Buffett did not rid himself of the mill business right away, he waited years. I think investors were hoping for a quick flip, hence the stock has hit a wall in the short term. I don't know if we have months more to wait, or years more, but hopefully after a more careful review of the store base and its potential profitability, we will see diversification.

Until then, it is simply a retail turnaround play, which is not an easy task with all the competition in the U.S. market these days.

I'm beginning to wonder whether or not Lampert's d...

2007-11-19T01:58:00.000-05:00

I'm beginning to wonder whether or not Lampert's decision to both run Sears and operate as an investor is really serving him well. It would seem that the operations of Sears and KMart ought best be carried out by someone with retail or merchandising experience with Lampert concerning himself with the overall profitability and capital structure of the company - more similar to Warren Buffett. It took Warren Buffett about 5 years to begin diversifying Berkshire Hathaway's business and begin acquiring other firms. Do you think we will see that soon with Sears?