Sears and K Mart owner Eddie Lampert has been swimming with the sharks since 2006 when it stopped growing and year on year comparable sales were down 8.6% at its US stores in 2008.
Talks of bankruptcy and restructuring did not stop Sears from holding out but the loss of 5% on the same metric again this Christmas weekend was the proverbial straw on the camel’s back for Eddie Lampert as the markets took Sears’ down 27% on news of 120 stores to be closed, what can only be described as a likely move into Chapter XI for Chicago’s model citizen who has also enjoined the state at various times with tax breaks to stay afloat in falling sales. Its latest brand agreements allowed exclusives to be sold at other stores from 2011
Macy;s meanwhile has turned its fortunes around almost successfully after its 2008 – 9 restructuring in which it took many storefronts down and revamped the rest without losing its premium brand.
Fund manager Berkowitz was the first victim claimed by the run on the stock losing $180 mln in one day, his Fairholme fund counting right next to Paulson’s flagship fund in size of $8 bln and losses this year. He had last added 1.4 mln shares in Q1 at near $80 and the stock is trading below $34 today, falling $11 in today’s session. Bruce Berkowitz’ fund also owns 30% of Florida based St Joe, a realty company that has lost 30% value of its shares in 2011 and needless to add a host of Financials that could not find a redeeming feature in their stock plays in 2011.
Apart from the shutdown of 120 stores, Sears also announced a $2.4 bln charge for good will impairment it will take on its books in Q4. It is the sixth worst performer on the board this year ahead of stalwart Bank of America which has invested in a plan with more than 30000 job cuts and $6 bln in annual savings
Meanwhile the hit and miss story of US luxury brands continued in a year that scored well for most luxury retailer s and manufacturers, with Paris Hilton and Rihanna perfume owners Parlux of France selling for $170 mln to Perfumania in US ownership. Apple is rumored to be out with two TV models in six months from now.
Walmart and Target continue to gain at Sears’ expense even as same store sale losses of 5% meant domestic comparable sales ( K mart to Kmart , Sears to Sears) were down 6% Nordstrom. Saks and Macys have been having bang up years too along with Target at times growing in Double digits in monthly reports.
Sears promised to invest in signage and fixtures, as well as improve online presence in a weak come back as Electronics, Appliances and apparel (K Mart) category sales losses caused the landslide in Sears revenues, a gap that proved to be the failing of Circuit City, Best Buy and others in a highly selective industry whikle hedge fund sloth proves incompetent. Competitors like GAp or Radio shack have failed or succeeded partially after putting in a full effort while Sears does not seem to get out of incrementalism , to use a cliche
- Bruce Berkowitz Loses Again, This Time With Sears (thestreet.com)
- Sears: Another Bad Investment for Bruce Berkowitz (blogs.wsj.com)
- Here Are The 10 Hedge Funds With The Most Exposure To Sears Holdings (SHLD) (businessinsider.com)
- The Chickens Have Finally Come Home To Roost At Sears (zerohedge.com)
- Sears Suppliers Ready to Pull Back in 2012 (thestreet.com)