Tuesday, December 2, 2008

Just lovely

This morning Sears Holdings (Sears & K-Mart) reported a third quarter loss of $1.16 per share or a loss of $0.90 if you excluded one time items. Analysts (who have been routinely wrong... but to be fair Sears gives no guidance whatsoever) were expecting a loss of $0.51 per share. Sales were lower than expected. Comparable store sales were a lovely -10.6% for the quarter. November comps were -7.8%.

What I loved most was the commentary from management: “Given the current economic and retail environment, we will carefully evaluate alternatives that provide financial flexibility in the near-term, while enhancing shareholder value in the long-term,” said W. Bruce Johnson, Sears Holdings’ interim chief executive officer and president. “These actions may include additional store closings or divestitures, remodels or repositioning of existing stores, acquisitions, and repurchases of our debt and common stock.” (emphasis added)

Acqusitions. Lovely. If there's anyone I want to see buying up other companies in a retail environment like this, it's the retailer who can't manage their way out of a paper bag. Can you imagine the conversaation that must be flowing around that board room? 'The economy stinks. Our business stinks. We have major operational issues. Let's buy someone else and bring them into our muck and mire.'

I am giving them the benefit of the doubt here. I'm believing that they understand how badly the retail business stinks and that they understand that their odor is even more pungent.

I recognize, by the way, that the stock is up over $5 or 15%. But can you say 'short covering'? I knew you could.

Put this one in the 'not even with someone else's money' category for me.

1 comment:

The Crazy Coxes said...

What are they thinking? Buying up companies is passe. Seriously, they should be combining with Abercrombie and Victoria's Secrets and asking Congress for a bailout. Sears has always been behind the times!