Cuts Continue for Sears Holdings Corp (NASDAQ:SHLD)

Sears Holdings Corp (NASDAQ:SHLD)

Sears Holdings Corp (NASDAQ:SHLD) announced the closing of 49 Kmart locations and 17 Sears stores by September. Earlier this year, Sears Holdings Corp (NASDAQ:SHLD) announced the closing of 150 stores then added 30 more to the list in May. Possibly more worrying for shareholders, the retailer announced it woulddelay paying off a large portion of a $500 million loan.

In 2003, Sears Holdings Corp (NASDAQ:SHLD) was trading over $25. It stock has since trended downwards in the face of more nimble and skilled competitors such as WalMart (WMT), Best Buy (BBY), and Target (TGT). Sears has also suffered in the digital age with the likes of Amazon taking market share from the entire retail bricks and mortar sector. This is a very different scene than when Sear’s held an unquestioned leadership role in American retail – a position it enjoyed for over a century. Sears Holdings Corp (NASDAQ:SHLD) was responsible for bringing goods to rural Americans that had no real access to traditional retail stores that one could rarely find outside of the city. There are houses still standing today that were ordered through the vaunted Sears catalog. The question is – which will still be standing in ten years’ time? The house, or the company that built it?

Sears Holdings Corp (NASDAQ:SHLD) burns through almost $2 billion of cash per year. So while an annual $1 billion savings plan is welcome news – it still requires more revenues to break even. Many analysts make the case that Sears is I a death spiral. Since 2012 EPS losses have been $29.15, $8.78, $12.87, $15.82, and $10.59. All of those losses have been on top of declining sales numbers. Since 2012, in billions, – $41.57, $39.85, $36.19, $31.20, and $25.15.

Contrarians point out that the future is not as bleak as some would have investors believe. Sales of former Sears brands still bring in royalties. The Kenmore brand is still a market leader and generates revenues of around $4 billion annually. Sears Auto Centers also have impressive revenues – around $2 billion annually. Prior to this most recent restricting, a few analysts have placed Sears Holdings Corp (NASDAQ:SHLD) NAV at over $30 per share. However, monetizing that is problematic – one would be maximizing short-term shareholder value at the expense of long-term viability. For now, the future shows no signs of any activity other than cost cutting.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.

Sears Holdings Corp (NASDAQ:SHLD) Rallies On Q1 Profit Even As Sales Decline

Sears Holdings Corp (NASDAQ:SHLD)

Sears Holdings Corp (NASDAQ:SHLD) was a big market mover after posting its first profit since 2015, helping fuel optimism about the impact of an ongoing turnaround effort. For the first three months of the year, the retailer says it generated a net income of $244 million compared to a net loss of $471 million a year earlier.

Cost Cuts Impact

Net profit in the first quarter comes on the heels of a cost-cutting push that has seen Sears Holdings Corp (NASDAQ:SHLD) spin off some assets as it sought to raise cash to stay afloat. However, the fact that the company’s core Kmart department stores continue to struggle, remains a point of concern for investors.

“During the first quarter, we took decisive actions to reduce our cost base and drive operational efficiencies which allowed us to make significant progress on our restructuring program. We also remained focused on increasing our financial flexibility and creating value from our asset base to ensure we continue to meet our financial obligations and fund our transformation,” said chief executive officer, Rob Riecker.

Sales & Cash Decline

Revenues in the first quarter totaled $4.3 billion compared to revenues of $5.4 billion reported a year earlier. The company has attributed the decline to fewer Kmart and Sears Full-line stores in operation compared to last year.

Comparable store sales declined by 11.2%, Sears Holdings Corp (NASDAQ:SHLD) having experienced a decline in sales in its grocery, household, pharmacy, apparel, and home categories. The same led to a decline in gross margin that dropped by $247 million compared to last year.

Selling and administrative expenses decreased $236 million in the quarter compared to last year – a drop that the company attributes to improves operational efficiency and reduced costs.

Sears Holdings Corp (NASDAQ:SHLD) market rally came as investors took note of Lambert’s turnaround plan that seems to paying off. However, with a shrinking store base and less advertising the company remains in a precarious position as it tries to return to its glory years.

The company’s cash balance dropping to $264 million from $286 million as of the end of 2016 is also a point of concern. While the company still boasts $3.7 billion in total liquidity, some investors are already starting to question the company’s financial health given the rate at which it is burning cash.

Sears Holdings Corp (NASDAQ:SHLD) stock was up by 13.52% in Thursday’s trading session, ending the day at $8.48 a share.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Is It A Red Start For Sears Holdings Corp (NASDAQ:SHLD)?

Sears Holdings Corp (NASDAQ:SHLD)

Sears Holdings Corp (NASDAQ:SHLD) closed almost 12% lower after the company’s CFO Jason Hollar attempted to alleviate investor concerns by soft-pedaling the language in its 10-K filing on substantial “going-concern” doubt. Hollar stated that the use of the new language was intended to follow regulatory standards.

Deloitte made no note of the going concern matter in its yearly report audit opinion, but the CFO provided the somewhat circular statement that its independent auditors offered the firm with an unqualified audit opinion, which the CFO then stated indicates the company remains a going concern.

Debtwire legal expert Joshua Friedman postulates that the new language could be an indication that CEO Eddie Lampert, who has put cash into Sears Holdings from his ESL Investments hedge fund and has some of the firm’s unsecured debt, could be prepared to turn off the monetary spigot.

The update

Another year has passed by and Sears Holdings Corp (NASDAQ:SHLD) tries to captivate investors.

The company obtained proceeds of $105 million from the asset sale of three properties this month. The company obtained gross proceeds of $72.5 million earlier in January from a sale-leaseback deal for 5 Sears Full-line stores and 2 Sears Auto Centers and they obtained additional gross proceeds of $105 million in February from the sale of 3 Sears full-line stores, two leased and one owned, which they will continue to manage as Sears sites for a period of up to 1 year.

In the press release it was noted that Sears Holdings Corp (NASDAQ:SHLD) recorded $105 million of proceeds in February 2017 by selling 3 assets. The question arises, are these two transactions the same? If yes, then one of the months is wrong? It could be that there are two different transactions, the terms coincidentally happen to be the same. There remains some confusion which as of now needs to be sorted out before taking out any call on Sears.

In the last trading session, the stock price of Sears Holdings Corp (NASDAQ:SHLD) declined more than 12% to close the session at $7.98. The decline came at a share volume 4.14 million compared to average share volume of 1.98 million.

Ticker Symbol SHLD
Last Price a/o 3:21 PM EST $7.98
Average Volume 1.93M
Market Cap (mlns)  $854.18M
Shares Outstanding (mlns) 107.04M
Share Float (mlns) 70.84M
Inside Ownership 30.00%
Short Float 25.39%
Short Interest Ratio 9.33
Quarterly Return -20.44%
YTD Return -14.10%
Year Return -46.12%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.