In 2010, SHLD began to liquidate what would eventually become a total of about 300 stores — we’ve seen no real sign of progress from that. In early 2012, Sears Holdings completed the spinoff of Orchard Supply Hardware Stores. Still no sign of better days. In late 2012, Sears sold its Hometown and Outlet Stores business. No light at the end of the tunnel.
And why not? I’ve got two reasons:
The first reason (most likely) is that Eddie Lampert couldn’t care less about turning the retailer around. It’s an asset sale with a finite end.
The second reason we’re not seeing a legitimate recovery effort from Sears Holdings is, rather than dump the underperforming stores and divisions, Lampert has been shedding units and divisions that actually contribute to the bottom line rather than chip away at it … like Lands’ End.
With that in mind, the sale of Sears Canada might mark the point where SHLD stock owners really start to worry.
Up until this point, the 128-year-old retailer always had another division that it could count on to provide stability, if not cash. If Sears Canada is taken out of the mix, though — and this is being generous to Sears Canada — there’s really nothing left of any marketable value.
Oh, brand names like Craftsman and Kenmore still mean something, but they don’t mean nearly as much without Sears stores to sell them. Plus, the mere association with Sears may have whittled away more of their value than the company may care to admit.
And Sears’ auto centers? Again, it’s a brand and business that’s been largely ruined by association with an increasingly unimpressive retailer.
Truth be told, Lands’ End was the last great division the company had to sell. From here, the value of its marketable assets could really start to deteriorate, bringing a much quicker end to the charade than most investors might realize.
And that’s probably been the plan for a number of years.
The only concern current owners of SHLD stock need bother mulling now is the pace of the liquidation. As former Sears executive Steven Dennis (who left in 2003) explained earlier in the week, the company can’t actually afford to pay for the store overhauls it needs to make happen in order to rekindle growth. Meanwhile, the Kenmore and Craftsman brand names are losing value every day.
Time is money, and the company can’t afford to stop losing it.
Mr. Lampert, for the sake of current Sears Holdings investors, please pick up the pace.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.