Sears Holdings Corp (NASDAQ:SHLD) shot up by about 15% in Tuesday’s midday trading on yet another piece of news that sounds good for Sears stock holders.
But really, it’s just fool’s gold.
Sears stock rose shortly after a Bloomberg report saying its Craftsman brand was receiving interest from Stanley Black & Decker, Inc. (NYSE:SWK) and Techtronic Industries Co. out of Hong Kong, among others.
According to Bloomberg, “Final bids, which may value the brand at about $2 billion, are due at the end of the month, said the people, who asked not to be identified because the information is private.”
Sears, which has been shedding assets and closing locations to save cash amid a freefall in SHLD stock, has been shopping its Craftsman, Kenmore and DieHard brands for months. The idea of a $2 billion windfall, then, for a company that boasts just $276 million in cash versus more than $3.5 billion in debt is certainly encouraging.
Moreover, CEO Eddie Lampert took to the blogosphere on Monday to reassure investors that, despite rumors to the contrary, it would not be ceasing operations across all its Kmart stores.
“Recent reports have suggested that Kmart will cease its operations. I can tell you that there are no plans and there have never been any plans to close the Kmart format. In fact, we’ve been working hard to make Kmart a more fun, engaging place to shop, powered by our integrated retail innovations and Shop Your Way.”
Lovely. Enjoy it while it lasts.
SHLD Stock Is Heading for the Gutter
Note what’s driving Sears shares today. The potential sale of one of Sears’ top brands. A blog that says Kmart is “only” closing underperforming Kmart stores, but not giving up on the entire franchise.
Yes, Lampert has reiterated faith in his company, saying management is “focused on executing our plan and establishing a foundation from which Sears Holdings can grow for years to come.”
But remember: This is only one of several missives in which Lampert has sought to convince Sears stock holders of the exact same thing. Quarter after quarter, SHLD has plummeted and been given lip-service promises by the CEO in response.
Revenues are off nearly 40% across the past three years alone. Sears has been swallowing hundreds of millions of dollars in red ink for four straight quarters, and it has posted annual losses for six consecutive years.
Sears already has spun off Lands’ End, Inc. (NASDAQ:LE) and Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS). Last year, Lampert even sold off Sears’ real estate as Seritage Growth Properties (NYSE:SRG).
All these are efforts to wring as much value out of Sears as possible.
Not one is a growth strategy.
Forget Sears Stock
Tuesday’s bump in Sears shares is a relative fart in the wind compared to the overall trend. SHLD is off nearly 95% since its 2007 highs, and shares still are off a whopping 40% year-to-date.
In other words, this move has “dead-cat bounce” written all over it.
Should Eddie Lampert one day actually provide a plan that details how Sears and Kmart will improve the customer experience and actually bring people back through the doors, we can talk about a comeback.
But if you’re for whatever reason still in SHLD hoping that Lampert’s promises will one day come true, come to your senses, and get out of Sears stock with slightly smaller losses than you were afforded yesterday.