With SHLD Stock Sinking Fast, Sears Kicks Lands’ End to the Curb

by Burke Speaker | December 6, 2013 9:46 am

Sears (SHLD[1]) stock has been on a downward spiral for the past month and as SHLD stock continues to fall, the retail giant announced it is spinning off Lands’ End as a separate entity.

Sears-shld-stock-sear-decline[2]Back in October, Sears gave investors pause when it announced it was considering this move — but added on its Sears Auto Center business as another possibility. (Today’s announcement did not mention the auto center.)

Belus Capital Advisors analyst Brian Sozzi told the Associated Press that the move shows Sears “was unable to get a buyer at the right price for Land’s End and may raise questions about how much other well-known brand names Sears owns, like Craftsman, are worth.”

“It makes you question the value of what Sears is sitting on,” he told the wire service. “It may have to continue dismembering itself to stay alive today and shrink from inside out.”

Shrinking, in fact, is just a sad reality for SHLD these days.

SHLD stock is down 22% in the last five days alone — putting a serious dent in its previously better looking numbers for the past year.

In looking for financial resources, Sears has pulled out other businesses in recent years: its Hometown and Sears Outlet stores and its Orchard Supply Hardware Stores.

Its also tried to increase profitability in other areas and managed to reduce its net debt by $400 million. The company has reduced inventory, sold assets and spun off others.

But the losses have come fast and hard.

The company has posted 27 straight quarterly sales declines. In November revenue declined 7% to $8.27 as the company marked down goods and third quarter losses were shown to be bigger than expected.

And just this week Edward Lampert, the hedge-fund manager who tried to turn around the company, cut his stake below 50%.

“We will continue to focus on the transformation of Sears Holdings into a membership-focused company and on creating long- term value for its shareholders,” Lampert said in an e-mailed statement. “My significant personal ownership in the company is a sign of my confidence and alignment with all shareholders.”

Such “confidence” however, may not be shared by investors.

With all the behind-the-scenes work that Sears has done to help boost the stock this year, SHLD stock of late is causing investors to weigh their options.

The Lands’ End removal, for some, is being viewed as bailing water from a sinking boat.

The move has been used before — but how much dead weight does Sears have left to dump? There is only so much shrinking left before the retailer has to face up to what is keeping customers away, and look at improving its profitability like they did in the old days: By selling merchandise.

Sears bought Lands’ End in 2002. The company sells clothing and home goods online and via catalogs.

  1. SHLD: http://studio-5.financialcontent.com/investplace/quote?Symbol=SHLD
  2. [Image]: https://investorplace.com/wp-content/uploads/2011/03/sears6.jpg

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